What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-02-19 compared with 2020-03-16 · 713 added, 998 removed, 1005 unchanged (63% of the section changed)

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Reports of Independent Registered Public Accounting Firm

Consolidated Statements of Operations for the Successor period from December 14, 2019 through December 31, 2019, the Predecessor periods from January 1, 2019 through December 13, 2019 and each of the two years ended December 31, 2018 and 2017

Consolidated Statements of Comprehensive Income (Loss) for the Successor period from December 14, 2019 through December 31, 2019, the Predecessor periods from January 1, 2019 through December 13, 2019 and each of the two years ended December 31, 2018 and 2017

Consolidated Statements of Operations for the year ended December 31, 2020 and the period from December 14, 2019 through December 31, 2019 (Successor periods), and for the period from January 1, 2019 through December 13, 2019 and the year ended December 31, 2018 (Predecessor periods)

Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2020 and the period from December 14, 2019 through December 31, 2019 (Successor periods), and for the period from January 1, 2019 through December 13, 2019 and the year ended December 31, 2018 (Predecessor periods)

Consolidated Balance Sheets as of December 31, 2020 and 2019

Consolidated Statements of Shareholders’ Equity (Deficiency) for the Successor period from December 14, 2019 through December 31, 2019, the Predecessor periods from January 1, 2019 through December 13, 2019 and each of the two years ended December 31, 2018 and 2017

Consolidated Statements of Cash Flows for the Successor period from December 14, 2019 through December 31, 2019, the Predecessor periods from January 1, 2019 through December 13, 2019 and each of the two years ended December 31, 2018 and 2017

Consolidated Statements of Shareholders’ Equity (Deficiency) for the year ended December 31, 2020 and the period from December 14, 2019 through December 31, 2019 (Successor periods), and for the period from January 1, 2019 through December 13, 2019 and the year ended December 31, 2018 (Predecessor periods)

Consolidated Statements of Cash Flows for the year ended December 31, 2020 and the period from December 14, 2019 through December 31, 2019 (Successor periods), and for the period from January 1, 2019 through December 13, 2019 and the year ended December 31, 2018 (Predecessor periods)

Notes to Consolidated Financial Statements

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Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Weatherford International plc and subsidiaries (the Company) as of December 31, 2019 (Successor) and 2018 (Predecessor), the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity (deficiency), and cash flows for the periods from December 14, 2019 to December 31, 2019 (Successor period) and from January 1, 2019 to December 13, 2019 and for each of the years in the two‑year period ended December 31, 2018 (Predecessor periods), and the related notes and financial statement schedule II (collectively, the consolidated financial statements).

We have audited the accompanying consolidated balance sheets of Weatherford International plc and subsidiaries (the Company) as of December 31, 2020 and December 31, 2019, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity (deficiency), and cash flows for the year ended December 31, 2020 and for the period from December 14, 2019 to December 31, 2019 (Successor periods), and for the period from January 1, 2019 to December 13, 2019 and for the year ended December 31, 2018 (Predecessor periods), and the related notes and financial statement schedule II (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for the Successor and Predecessor periods, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2019 , based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 16, 2020 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

New Basis of Presentation

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 19, 2021 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

New Basis of Accounting

As discussed in Notes 2 and 3 to the consolidated financial statements, on September 11, 2019, the United States Bankruptcy Court for the Southern District of Texas entered an order confirming the Company’s plan for reorganization under Chapter 11, which became effective on December 13, 2019.

Accordingly, the accompanying consolidated financial statements as of December 31, 2019 and for the Successor period have been prepared in conformity with Accounting Standards Codification 852, Reorganizations , with the Company’s assets, liabilities, and capital structure having carrying amounts not comparable with prior periods.

Accordingly, the accompanying consolidated financial statements have been prepared in conformity with Accounting Standards Codification Subtopic 852-10, Reorganizations , for the Successor as a new entity with assets, liabilities, and a capital structure having carrying amounts not comparable with prior periods as described in Note 3.

Change in Accounting Principle

As discussed in Note 4 to the consolidated financial statements, the Company has changed its method of accounting for leases as of January 1, 2019 due to the adoption of Accounting Standards Update No.

As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for leases as of January 1, 2019 due to the adoption of Accounting Standards Update No.

2016-02, Leases .

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

Critical Audit Matters

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

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

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

Valuation of Long-Lived Assets

As discussed in Notes 1 and 10 to the consolidated financial statements, the Company records long-lived assets at cost and reviews such assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable.

The Company groups individual assets at the lowest level of identifiable cash flows and performs an undiscounted cash flow analysis to identify assets or asset groups that may not be recoverable.

A fair value assessment is

Weatherford International plc – 2020 Form 10-K | 43

performed on assets or asset groups identified as not being recoverable using a discounted cash flow analysis to determine if an impairment has occurred.

If an impairment has occurred, the Company recognizes a loss for the difference between the carrying amount and the fair value of the asset or asset group.

The carrying value of long-lived assets as of December 31, 2020 included property, plant and equipment, net of $1,236 million, definite-lived intangible assets of $810 million, and operating lease right-of-use assets of $138 million.

The Company recognized an impairment charge of $814 million for the year ended December 31, 2020.

We identified the valuation of certain long-lived assets to be a critical audit matter.

The significant assumptions used to determine the fair value of certain asset groups, specifically the forecasted revenues, forecasted operating margins, and the discount rate used in the estimated discounted future cash flows by asset group, were challenging to test.

A high degree of subjective auditor judgment was required as changes to the significant assumptions could have a significant effect on the Company’s determination of the fair value of those asset groups.

Additionally, specialized skills and knowledge were required in the assessment of the discount rate used in the valuation.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls within the Company’s long-lived asset impairment process.

This included controls related to the Company’s development of the significant assumptions listed above and the determination of fair value of certain asset groups.

We evaluated the reasonableness of the significant assumptions by evaluating the Company’s development of the forecasted revenues and forecasted operating margins assumptions for certain asset groups.

We evaluated the forecasted revenues and forecasted operating margins by asset group by comparing to relevant historical results, changes in the business, and external industry data.

In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in (1) evaluating the selected discount rate by comparing it against a discount rate range that was independently developed using publicly available market data for comparable companies and (2) developing an estimate of those asset groups’ fair values by using the Company’s cash flow assumptions and the independently developed discount rate, and comparing the results to the Company’s fair value estimate.

Valuation of Goodwill

As discussed in Notes 1 and 11 to the consolidated financial statements, the Company performs an impairment test for goodwill annually as of October 1 or more frequently whenever events and changes in circumstances indicate that the carrying value of a reporting unit might exceed its fair value.

The fair values of reporting units are determined using a combination of the income approach and the market approach.

If the carrying value of a reporting unit were to exceed its fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.

The Company recognized an impairment loss of $239 million during the year ended December 31, 2020 reducing the carrying value of goodwill as of December 31, 2020 to $0.

We identified the valuation of goodwill to be a critical audit matter.

The significant assumptions used to determine the fair value of the Middle East and North Africa and the Russia, Turkmenistan and Kazakhstan reporting units, specifically the forecasted revenues, forecasted operating margins, and the discount rate used in the discounted future cash flows, were challenging to test.

Additionally, specialized skills and knowledge were required in the assessment of the discount rate used in the valuation.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls within the Company’s goodwill impairment process.

This included controls related to the Company’s development of the significant assumptions listed above and the determination of fair value of the Middle East and North Africa and the Russia, Turkmenistan and Kazakhstan reporting units.

We evaluated the forecasted revenues and forecasted operating margins by reporting unit by comparing to relevant historical results, changes in the business, and external industry data.

In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in (1) evaluating the selected discount rate by comparing it against a discount rate range that was independently developed using publicly available market data for comparable companies and (2) developing an estimate of those reporting units’ fair values by using the Company’s cash flow assumptions and the independently developed discount rate, and comparing the results to the Company’s fair value estimate.

We have served as the Company’s auditor since 2013.

Houston, Texas

March 16, 2020

February 19, 2021

Weatherford International plc – 2020 Form 10-K | 44

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In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2019 (Successor) and 2018 (Predecessor), the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity (deficiency), and cash flows for the periods from December 14, 2019 to December 31, 2019 (Successor period) and from January 1, 2019 to December 13, 2019 and for each of the years in the two-year period ended December 31, 2018 (Predecessor periods), and the related notes and financial statement schedule II (collectively, the consolidated financial statements), and our report dated March 16, 2020 expressed an unqualified opinion on those consolidated financial statements.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and December 31, 2019, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity (deficiency), and cash flows for the year ended December 31, 2020 and for the period from December 14, 2019 to December 31, 2019 (Successor periods) and for the period from January 1, 2019 to December 13, 2019 and for the year ended December 31, 2018 (Predecessor periods), and the related notes and financial statement schedule II (collectively, the consolidated financial statements), and our report dated February 19, 2021 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

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Houston, Texas

March 16, 2020

February 19, 2021

Weatherford International plc – 2020 Form 10-K | 45

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CONSOLIDATED STATEMENTS OF OPERATIONS

Successor Predecessor

Period From Period From

Year 12/14/2019 1/1/2019

Ended through through Year Ended

(Dollars and shares in millions, except per share amounts) 12/31/2020 12/31/2019 12/13/2019 12/31/2018

Products $ 1,435 $ 111 $ 1,819 $ 2,051

Services 2,250 150 3,135 3,693

Total Revenues 3,685 261 4,954 5,744

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Research and Development 97 7 136 139

Selling, General and Administrative Attributable to Segments

Corporate General and Administrative

Goodwill Impairment

Long-Lived Asset Impairments, Write-Downs and Other

Selling, General and Administrative 837 45 895 894

Impairments and Other Charges 1,236 — 1,104 2,155

Restructuring Charges 206 — 189 126

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Interest Expense, Net ( 266 ) ( 12 ) ( 362 ) ( 614 )

Warrant Fair Value Adjustment

Bond Tender and Call Premium

Currency Devaluation Charges

Other Income (Expense), Net

Other Expense, Net ( 53 ) — ( 26 ) ( 59 )

Income (Loss) Before Income Taxes ( 1,814 ) ( 15 ) 3,819 ( 2,757 )

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Net Income (Loss) Attributable to Weatherford $ ( 1,921 ) $ ( 26 ) $ 3,661 $ ( 2,811 )

Income (Loss) Per Share Attributable to Weatherford:

Basic and Diluted

Weighted Average Shares Outstanding:

Basic & Diluted

Basic and Diluted Loss Per Share Attributable to Weatherford $ ( 27.44 ) $ ( 0.37 ) $ 3.65 $ ( 2.82 )

Basic and Diluted Weighted Average Shares Outstanding 70 70 1,004 997

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

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Successor Predecessor

Period From Period From

12/14/2019 1/1/2019

Year Ended through through Year Ended

(Dollars in millions) 12/31/2020 12/31/2019 12/13/2019 12/31/2018

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Interest Rate Derivative Loss — — 8 —

Other — — — 1

Other Comprehensive Income (Loss) ( 52 ) 9 49 ( 227 )

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Restricted Cash 167 182

Accounts Receivable, Net of Allowance for Uncollectible Accounts of $0 at December 31, 2019 and $123 at December 31, 2018

Accounts Receivable, Net of Allowance for Credit Losses of $ 32 at December 31, 2020

and $ 0 at December 31, 2019

Inventories, Net 717 972

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Property, Plant and Equipment, Net of Accumulated Depreciation of $ 367 at December 31, 2020 and $ 25 at December 31, 2019

Intangible Assets, Net of Accumulated Amortization of $9 at December 31, 2019 and $743 at December 31, 2018

Goodwill — 239

Intangible Assets, Net of Accumulated Amortization of $ 173 at December 31, 2020 and

$ 9 at December 31, 2019

Operating Lease Right-of-Use Assets 138 256

Other Non-current Assets 73 109

Total Assets $ 5,434 $ 7,293

Short-term Borrowings and Current Portion of Long-term Debt $ 13 $ 13

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Income Taxes Payable 185 205

Current Portion of Operating Lease Liabilities 71 79

Other Current Liabilities 471 520

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Long-term Debt 2,601 2,151

Operating Lease Liabilities 177 213

Other Non-current Liabilities 357 341

Total Liabilities 4,497 4,377

Shareholders’ Equity (Deficiency):

Predecessor Ordinary Shares - Par Value $0.001;

Authorized 1,356 shares, Issued and Outstanding 1,002 shares at December 31, 2018

Successor Ordinary Shares - Par value $0.001;

Authorized 1,356, Issued and Outstanding 70 at December 31, 2019

Predecessor Capital in Excess of Par Value

Successor Capital in Excess of Par Value

Retained Earnings (Deficit)

Shareholders’ Equity:

Ordinary Shares - Par value $ 0.001 ;

Authorized 1,356 , Issued and

Outstanding 70 at December 31, 2020 and 2019

Capital in Excess of Par Value 2,897 2,897

Retained Deficit ( 1,947 ) ( 26 )

Accumulated Other Comprehensive Income (Loss) ( 43 ) 9

Weatherford Shareholders’ Equity (Deficiency)

Noncontrolling Interests

Total Shareholders’ Equity (Deficiency)

Total Liabilities and Shareholders’ Equity (Deficiency)

Weatherford Shareholders’ Equity 907 2,880

Noncontrolling Interests (“NCI”) 30 36

Total Shareholders’ Equity 937 2,916

Total Liabilities and Shareholders’ Equity $ 5,434 $ 7,293

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

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIENCY)

(Dollars in millions)

Par Value of Issued Shares

Capital In Excess of Par Value

Retained Earnings (Deficit)

(Dollars in millions) Par Value of Issued Shares Capital In Excess of Par Value Retained Earnings (Deficit) Accumulated

Comprehensive

Income (Loss)

Non-controlling Interests

Total Shareholders’ (Deficiency) Equity

Balance at December 31, 2016 (Predecessor)

Net Income (Loss)

Other Comprehensive Income

Dividends Paid to Noncontrolling

Equity Awards Granted, Vested and

Income (Loss) Non-controlling Interests Total Shareholders’ (Deficiency) Equity

Balance at December 31, 2017 (Predecessor) $ 1 $ 6,655 $ ( 5,763 ) $ ( 1,519 ) $ 55 $ ( 571 )

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Other Comprehensive Loss — — — ( 227 ) — ( 227 )

Dividends Paid to Noncontrolling Interests

Adoption of Intra-Entity Transfers of

Assets Other Than Inventory and

Revenue from Contracts with

Dividends Paid to NCI — — — — ( 16 ) ( 16 )

Adoption of Accounting Standard — — ( 97 ) — — ( 97 )

Equity Awards Granted, Vested and

Exercised — 52 — — — 52

Other — 4 — — ( 20 ) ( 16 )

Balance at December 31, 2018 (Predecessor) $ 1 $ 6,711 $ ( 8,671 ) $ ( 1,746 ) $ 39 $ ( 3,666 )

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Other Comprehensive Income — — — 49 — 49

Dividends Paid to Noncontrolling

Dividends Paid to NCI — — — — ( 22 ) ( 22 )

Equity Awards Granted, Vested and

Exercised — 22 — — — 22

Equity Awards Vested and Cancelled

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Elimination of Predecessor Equity

Issuance of New Ordinary Shares in

Connection with the Plan to Creditors

Balances ( 1 ) ( 6,757 ) 5,010 1,697 — ( 51 )

Issuance of New Ordinary Shares to

Creditors in Connection with the Plan — 2,837 — — — 2,837

Issuance of New Ordinary Shares to

Prior Shareholders — 29 — — — 29

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Balance at December 31, 2019 (Successor) $ — $ 2,897 $ ( 26 ) $ 9 $ 36 $ 2,916

Net Income (Loss) — — ( 1,921 ) — 22 ( 1,899 )

Other Comprehensive Income — — — $ ( 52 ) — ( 52 )

Dividends Paid to NCI — — — — ( 28 ) ( 28 )

Balance at December 31, 2020 (Successor) $ — $ 2,897 $ ( 1,947 ) $ ( 43 ) $ 30 $ 937

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

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CONSOLIDATED STATEMENTS OF CASH FLOWS

Successor Predecessor

Period From Period From

Year 12/14/2019 1/1/2019 Year

Ended through through Ended

(Dollars in millions) 12/31/2020 12/31/2019 12/13/2019 12/31/2018

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Net Income (Loss) $ ( 1,899 ) $ ( 24 ) $ 3,684 $ ( 2,791 )

Adjustments to Reconcile Net Income (Loss) to Net Cash Used in Operating Activities:

Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by (Used in) Operating Activities:

Depreciation and Amortization 503 34 447 556

Goodwill Impairment

Gain on Settlement of Liabilities Subject to Compromise — — ( 4,297 ) —

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Long-lived Asset Impairments 814 — 20 151

Venezuelan Receivables Write-Down

Inventory Write-off and Other Related Charges

Goodwill Impairment 239 — 730 1,917

Inventory Charges 210 — 159 80

Asset Write-Downs and Other Charges 60 — 145 62

Employee Share-Based Compensation Expense — — 46 47

Currency Devaluation Charges

Bond Tender Premium

Gain on Sale Businesses, Net — — ( 112 ) —

Deferred Income Tax Provision (Benefit) ( 5 ) — 25 ( 79 )

Warrant Fair Value Adjustment

Defined Benefit Pension Plan Gains

Change in Operating Assets and Liabilities, Net:

Accounts Receivable 378 36 ( 135 ) ( 70 )

Inventories 64 18 ( 215 ) 86

Accounts Payable ( 250 ) ( 79 ) ( 72 ) ( 90 )

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Net Cash Provided by (Used in) Operating Activities $ 210 $ 61 $ ( 747 ) $ ( 242 )

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

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WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED

(Dollars in millions)

Cash Flows From Investing Activities:

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Acquisition of Intangible Assets ( 4 ) ( 1 ) ( 13 ) ( 28 )

Proceeds (Payment) from Disposition of Businesses and Investments

Proceeds from Divestiture of Businesses and Investments 11 7 328 257

Proceeds from Disposition of Assets 22 — 84 106

Other Investing Activities

Proceeds from Bond Maturities 50 — — —

Net Cash Provided by (Used in) Investing Activities $ ( 75 ) $ ( 14 ) $ 149 $ 122

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Repayments of Long-term Debt ( 9 ) ( 1 ) ( 318 ) ( 502 )

Borrowings (Repayments) of Short-term Debt, Net

Repayments of Short-term Debt, Net ( 27 ) ( 1 ) ( 347 ) 158

DIP Financing Fees and Payments on Backstop Agreement — — ( 137 ) —

Bond Tender Premium

Deferred Consideration Payment ( 24 ) — — —

Other Financing Activities, Net ( 45 ) — ( 49 ) ( 74 )

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Income Taxes Paid, Net of Refunds $ 79 $ 2 $ 89 $ 99

Non-Cash Financing Obligations

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

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Weatherford is one of the world’s leading providers of equipment and services used in the drilling, evaluation, completion, production and intervention of oil and natural gas wells.

We operate in approximately 80 countries, which are located in virtually all of the major oil and natural gas producing regions in the world.

We operate in over 75 countries and have service and sales locations in oil and natural gas producing regions globally.

Many of our businesses, including those of our predecessor companies, have been operating for more than 50 years.

The authorized share capital of Weatherford includes 1.356 billion ordinary shares with a par value of $ 0.001 per share.

While our ordinary shares remain registered on the New York Stock Exchange (the “NYSE”), the NYSE suspended trading in our ordinary shares in May 2019 and our appeal of that suspension is pending.

Since our emergence from bankruptcy, our ordinary shares have been quoted on the OTC Pink Marketplace under the symbol “WFTLF”.

Principles of Consolidation

We consolidate all wholly owned subsidiaries, controlled joint ventures and variable interest entities where the Company has determined it is the primary beneficiary.

At December 31, 2019, we had a variable interest entity related to our subsidiaries in Mexico held in trust during our bankruptcy proceedings.

Subsequently, in January 2020, the trust was dissolved.

The delisting of our ordinary shares from the New York Stock Exchange (“NYSE”) became effective on April 27, 2020.

Our ordinary shares were deregistered under Section 12(b) of the Exchange Act on July 16, 2020.

We continue to evaluate listing options and intend to relist our ordinary shares when our Board of Directors determines market conditions are appropriate.

The Company intends to continue filing periodic reports with the Securities and Exchange Commission (“SEC”) on a voluntary basis.

Our ordinary shares trade on the OTC Pink Marketplace under the ticker symbol “WFTLF”.

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S.

GAAP) and pursuant to the rules and regulations of the SEC for annual financial information.

We consolidate all wholly owned subsidiaries and controlled joint ventures.

All material intercompany accounts and transactions have been eliminated in consolidation.

Certain prior year amounts have been reclassified to conform to the current year presentation, including those related to the adoption of new accounting standards.

Prior year net income and shareholders’ deficiency were not affected by these reclassifications.

See subsection entitled “New Accounting Pronouncements” for additional details.

Prior year net income (loss) and shareholders’ equity (deficiency) were not affected by these reclassifications.

Use of Estimates

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GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, the reported amounts of revenues and expenses during the reporting period, and disclosure of contingent assets and liabilities.

On an on-going basis, we evaluate our estimates and assumptions, including those related to uncollectible accounts receivable, lower of cost or net realizable value of inventories, equity investments, derivative financial instruments, intangible assets and goodwill, property, plant and equipment (“PP&E”), leases, income taxes, self-insurance, foreign currency exchange rates, pension and post-retirement benefit plans, disputes, litigation, contingencies and share-based compensation.

On an on-going basis, we evaluate our estimates and assumptions, including those related to allowance for credit losses, inventory valuation reserves, recoverability of long-lived assets, valuation of goodwill, useful lives used in depreciation and amortization, income taxes and related valuation allowance, accruals for contingencies, actuarial assumptions to determine costs and liabilities related to employee benefit plans, and share-based compensation.

We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

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Bankruptcy Court for the Southern District of Texas (“Bankruptcy Court”).

The Weatherford Parties obtained joint administration of their Chapter 11 cases under the caption In re Weatherford International plc, et al.

19-33694 (“Cases”).

On September 11, 2019 the Plan, as amended, was confirmed by the Bankruptcy Court and on December 13, 2019 (“Effective Date” or “Fresh Start Reporting Date”) after all conditions to effectiveness were satisfied, we emerged from bankruptcy after successfully completing the reorganization pursuant to the Plan.

On December 13, 2019 (“Effective Date” or “Fresh Start Reporting Date”) after all conditions to effectiveness were satisfied, we emerged from bankruptcy after successfully completing the reorganization pursuant to the Plan.

Weatherford International plc – 2020 Form 10-K | 51

Table of Contents Item 8 | Notes to the Consolidated Financial Statements

The Consolidated Financial Statements included herein have been prepared as if we are a going concern and in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic No.

852 – Reorganizations (“ASC 852”).

During bankruptcy we segregated liabilities and obligations whose treatment and satisfaction were dependent on the outcome of the Chapter 11 proceedings and classified these items as “ Liabilities Subject to Compromise ” with respect to the Predecessor (as defined below) as shown in “ Note 3 – Fresh Start Accounting ”.

In addition, we have classified all income, expenses, gains or losses that were incurred or realized as a result of the Chapter 11 proceedings as “ Reorganization Items ” in our Consolidated Statements of Operations through the Effective Date.

In accordance with ASC 852, we qualified for and adopted fresh start accounting (“Fresh Start Accounting”) upon emergence from Chapter 11, at which point we became a new entity for financial reporting because (i) the holders of the then existing ordinary shares of the Predecessor company received less than 50% of the new ordinary shares of the Successor company outstanding upon emergence and (ii) the reorganization value of the Company’s assets immediately prior to confirmation of the Plan was less than the total of all post-petition liabilities and allowed claims.

Upon adoption of Fresh Start Accounting as reflected in “ Note 3 – Fresh Start Accounting ,” the reorganization value derived from the enterprise value associated with the Plan was allocated to the Company’s identifiable tangible and intangible assets and liabilities based on their fair values (except for deferred income taxes), with the remaining excess value allocated to Goodwill in accordance with ASC 805 – Business Combinations.

During bankruptcy in 2019 we segregated liabilities and obligations whose treatment and satisfaction were dependent on the outcome of the Chapter 11 proceedings and classified these items as “Liabilities Subject to Compromise” with respect to the Predecessor (as defined below) as shown in “Note 3 – Fresh Start Accounting”.

In addition, we classified all income, expenses, gains or losses that were incurred or realized as a result of the Chapter 11 proceedings as “Reorganization Items” in our 2019 Consolidated Statements of Operations through the Effective Date.

In accordance with ASC 852, we qualified for and adopted fresh start accounting (“Fresh Start Accounting”) on the Fresh Start Reporting Date, at which point we became a new entity for financial reporting because (i) the holders of the then existing ordinary shares of the Predecessor company received less than 50% of the new ordinary shares of the Successor company outstanding upon emergence and (ii) the reorganization value of the Company’s assets immediately prior to confirmation of the Plan was less than the total of all post-petition liabilities and allowed claims.

Upon adoption of Fresh Start Accounting as reflected in “Note 3 – Fresh Start Accounting,” the reorganization value derived from the enterprise value associated with the Plan was allocated to the Company’s identifiable tangible and intangible assets and liabilities based on their estimated fair values (except for deferred income taxes), with the remaining excess value allocated to Goodwill in accordance with ASC 805 – Business Combinations.

Deferred income tax amounts were determined in accordance with ASC 740 – Income Taxes.

The Effective Date fair values of the Company’s assets and liabilities differ materially from their recorded values as reflected on the Predecessor balance sheets.

References to “Predecessor” relate to the Consolidated Balance Sheets as of December 31, 2018, and Consolidated Statements of Operations for the year ended December 31, 2018 and 2017 and for the period from January 1, 2019 through and including the adjustments from the application of Fresh Start Accounting on December 13, 2019 (“Predecessor Period”).

References to “Successor” relate to the Consolidated Balance Sheets of the reorganized Company as of December 31, 2019 and Consolidated Statements of Operations from December 14, 2019 through December 31, 2019 (“Successor Period”) and are not comparable to the Consolidated Financial Statements of the Predecessor as indicated by the “black line” division in the financials and footnote tables, which emphasizes the lack of comparability between amounts presented.

In addition, Note 3 – Fresh Start Accounting provides a summary of the Consolidated Balance Sheets as of December 13, 2019 in the first column, and then presents adjustments to reflect the Plan and fresh start impacts to derive the opening Successor Consolidated Balance Sheets as of December 13, 2019.

The Company’s financial results for future periods following the application of Fresh Start Accounting will be different from historical trends and the differences may be material.

See “ Note 2 – Emergence from Chapter 11 Bankruptcy Proceedings ” and “ Note 3 – Fresh Start Accounting ” for additional details regarding the bankruptcy.

References to “Predecessor” relate to the Consolidated Statements of Operations for the period from January 1, 2019 through and including the adjustments from the application of Fresh Start Accounting on December 13, 2019 and for the year ended December 31, 2018 (“Predecessor Periods”).

References to “Successor” relate to the Consolidated Balance Sheets of the reorganized Company as of December 31, 2020 and 2019 and Consolidated Statements of Operations for the year ended December 31, 2020 and for the period from December 14, 2019 through December 31, 2019 (“Successor Periods”) and are not comparable to the Consolidated Financial Statements of the Predecessor as indicated by the “black line” division in the financials and footnote tables, which emphasizes the lack of comparability between amounts presented.

In addition, “Note 3 – Fresh Start Accounting” provides a summary of the Predecessor Consolidated Balance Sheet as of December 13, 2019 in the first column, and then presents adjustments to reflect the Plan and fresh start impacts to derive the opening Successor Consolidated Balance Sheet as of December 13, 2019.

The Company’s financial results for periods following the application of Fresh Start Accounting will be different from historical trends and the differences may be material.

Cash and Cash Equivalents

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Restricted Cash

Our restricted cash balance of $ 182 million as of December 31, 2019 primarily includes cash collateral for certain of our letters of credit facilities and cash escrowed for the payment of bankruptcy professional fees.

We had no restricted cash balances as of December 31, 2018.

Allowance for Doubtful Accounts

We establish an allowance for doubtful accounts based on various factors including historical experience, the current aging status of our customer accounts, the financial condition of our customers and the business and political environment in which our customers operate.

Provisions for doubtful accounts are recorded when it becomes probable that customer accounts are uncollectible.

Our restricted cash balance of $ 167 million at December 31, 2020 and $ 182 million at December 31, 2019 primarily includes cash collateral for certain of our letters of credit facilities.

At December 31, 2019, restricted cash also included cash escrowed for the payment of bankruptcy professional fees.

Allowance for Credit Losses on Accounts Receivables

We establish an allowance for credit losses based on various factors to include historical experience, current conditions and environments in which our customers operate, the aging status and reasonable and supportable forecasts.

Our customer base has generally similar collectability risk characteristics, although risk profiles can vary between larger independent customers and state-owned customers, which may have a lower risk than smaller independent customers.

Provisions for credit losses are recorded based on estimated losses that customer accounts are uncollectible.

Major Customers and Credit Risk

Substantially all of our customers are engaged in the energy industry.

This concentration of customers may impact our overall exposure to credit risk, either positively or negatively, in that customers may be similarly affected by changes in economic and

This concentration of customers may impact our overall exposure to credit risk, either positively or negatively, in that customers may be similarly affected by changes in economic and industry conditions.

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

We maintain allowances for credit losses.

International sales also present various risks, including risks of war, civil disturbances and governmental activities that may limit or disrupt markets, restrict the movement of funds, or result in the deprivation of contract rights or the taking of property without fair consideration.

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industry conditions.

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

We maintain allowances for potential credit losses.

Most of our international sales are to large international or national oil companies and these sales have resulted in a concentration of receivables from certain national oil companies.

As of December 31, 2019 , the Eastern Hemisphere accounted for 53 % of our net outstanding accounts receivables and the Western Hemisphere accounted for 47 % of our net outstanding accounts receivables.

As of December 31, 2019 , our net outstanding accounts receivable in the U.S.

accounted for 14 % of our balance and Mexico accounted for 17 % of our balance.

our international sales are to large international or national oil companies and these sales may result in a concentration of receivables from such companies.

As of December 31, 2020, the Eastern and Western Hemisphere accounted for 54 % and 46 %, respectively, of our total net outstanding accounts receivable on our Consolidated Balance Sheets.

As of December 31, 2020, accounts receivable in Mexico and the U.S.

accounted for 23 % and 12 %, respectively, of our total net outstanding account receivables.

No other country accounted for more than 10% of our net outstanding accounts receivables balance.

During 2019 , 2018 and 2017 , no individual customer accounted for more than 10 % of our consolidated revenues.

Inventory held as of our emergence date was remeasured to fair value.

Refer to Note 3 – Fresh Start Accounting for further details.

We value our inventories at the lower of cost or net realizable value using either the first-in, first-out (“FIFO”) or average cost method.

For the years ended December 31, 2020, 2019 and 2018, no individual customer accounted for more than 10 % of our consolidated revenues.

We state our inventories at the lower of cost or net realizable value using either the first-in, first-out (“FIFO”) or average cost method.

Cost represents third-party invoice or production cost.

Production cost includes material, labor and manufacturing overhead.

Work in process and finished goods inventories include the cost of materials, labor and manufacturing overhead.

To maintain a book value that is the lower of cost or net realizable value, we regularly review inventory quantities on hand and maintain reserves for excess, slow moving and obsolete inventory.

Property, Plant and Equipment

PP&E held as of our emergence date was remeasured to fair value.

To maintain a carrying value that is the lower of cost or net realizable value, we regularly review inventory quantities on hand and compare to estimates of future product demand, market conditions, our production requirements, and technological developments.

We maintain reserves for excess, slow moving and obsolete inventory and we may periodically recognize additional charges for inventory in which we determine there is no forecasted demand.

Inventory held as of our 2019 emergence date was remeasured to fair value.

Refer to Note 3 – Fresh Start Accounting for further details.

PP&E, both owned and under finance leases, is carried at cost less accumulated depreciation.

Property, Plant and Equipment (“PP&E”)

PP&E, both owned and under finance leases, is initially stated at cost and depreciated over its estimated life.

Subsequently, PP&E is measured at cost less accumulated depreciation and impairment losses.

The carrying values are based on our estimates and judgments relative to capitalized costs, useful lives and salvage value, where applicable.

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The estimated useful lives of our major classes of PP&E are as follows:

Major Classes of Property, Plant and Equipment

Predecessor and Future

PP&E Estimated Useful Lives

Buildings and leasehold improvements

10 – 40 years or lease term

Rental and service equipment

2 – 15 years (3 – 10 years for assets added after emergence)

Machinery and other

Assets Held for Sale

We consider businesses or assets to be held for sale when all of the following criteria are met:

(a) management commits to a plan to sell the business or asset;

(b) the business or asset is available for immediate sale in its present condition;

(d) the sale of the business or asset is probable and we expect the completed sale will occur within one year;

(e) the business or asset is actively being marketed for sale at a price that is reasonable given its current fair value;

and, (f) it is unlikely that the plan to sell will be significantly modified or withdrawn.

Upon designation as held for sale, we record the carrying value of each business or asset at the lower of its carrying value or its estimated fair value, less estimated costs to sell, and cease recording depreciation.

If at any time these criteria are no longer met, subject to certain exceptions, the assets previously classified as held for sale are reclassified as held and used and measured individually at the lower of the following:

(a) the carrying amount before being classified as held for sale, adjusted for any depreciation (amortization) expense that would have been recognized had the asset been continuously classified as held and used or (b) the fair value at the date of the subsequent decision not to sell.

Major Classes of Property, Plant and Equipment PP&E Estimated Useful Lives

Buildings and leasehold improvements 10 – 40 years or lease term

Rental and service equipment 3 – 10 years

Machinery and other 2 – 12 years

PP&E held as of our 2019 emergence date was remeasured to fair value and new estimated useful lives were determined.

Refer to Note 3 – Fresh Start Accounting for further details.

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Goodwill and Intangible Assets

Goodwill represents the excess of consideration paid (or with respect to Fresh Start Accounting, the excess of reorganization value) over the fair value of net tangible and identifiable intangible assets acquired.

Goodwill represents the excess of consideration paid (or with respect to our 2019 Fresh Start Accounting, the excess of reorganization value) over the fair value of net tangible and identifiable intangible assets acquired.

Goodwill is not amortized but is evaluated for impairment.

We perform an impairment test for goodwill annually as of October 1 or more frequently if indicators of potential impairment exist that would more-likely-than-not reduce the fair value of the reporting unit below its carrying value.

We have the option to assess qualitative factors to determine if it is necessary to perform the quantitative step of the impairment test.

If it is not more-likely-than-not that the fair value of a reporting unit is less than its carrying value, further testing is not required.

If it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value, we must perform the quantitative goodwill impairment test.

We also have the unconditional option to bypass the qualitative assessment at any time and perform the quantitative step.

The quantitative step of the goodwill impairment test involves a comparison of the fair value of each of our reporting units with their carrying values.

If the carrying value of a reporting unit’s goodwill were to exceed its fair value, goodwill impairment is recognized as the difference to the extent of the goodwill balance.

When we have recognized goodwill on our consolidated balance sheet, we performed an impairment test for goodwill annually as of October 1 or more frequently whenever events and changes in the circumstances indicates that the carrying value of a reporting unit might exceed its fair value.

The quantitative step of the goodwill impairment test involves a comparison of the fair value of each of our reporting units that have goodwill assigned with their carrying values.

If the carrying value of a reporting unit’s goodwill were to exceed its fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.

With respect to the Successor and as a result of Fresh Start Accounting, our newly established identifiable intangible assets included developed technologies and our trade name.

With respect to the Predecessor, our identifiable intangible assets were acquired technology, licenses, patents, customer relationships and other identifiable intangible assets.

Successor identifiable intangible assets are amortized on a straight-line basis over their estimated economic lives generally ranging from 5 to 10 years.

Successor identifiable intangible assets are being amortized on a straight-line basis over their estimated economic lives generally ranging from five to 10 years.

As many areas of our business rely on patents and proprietary technology, we seek patent protection both inside and outside the U.S.

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Long-Lived Assets

Long-lived assets held as of our emergence date were remeasured to fair value.

Refer to Note 3 – Fresh Start Accounting for further details.

Long-lived assets at recorded at cost and reviewed on a regular basis to determine whether any events or changes in circumstances indicate the carrying amount of the assets or asset group may not be recoverable.

Long-lived assets consisting of PP&E, intangible assets, and operating lease right-of-use assets are initially recorded at cost and reviewed whenever events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable.

Factors that might indicate a potential impairment may include, but are not limited to, significant decreases in the market value of the long-lived asset or asset group, a significant change in the long-lived asset’s physical condition, the introduction of competing technologies, legal challenges, a reduction in the utilization rate of the assets, a change in industry conditions or a reduction in cash flows associated with the use of the long-lived asset.

If these or other factors indicate the carrying amount of the asset or asset group may not be recoverable, we determine whether an impairment has occurred through analysis of undiscounted cash flow of the asset or asset group at the lowest level that has an identifiable cash flow.

If these or other factors are present, the Company performs an undiscounted cash flow analysis to identify if the asset or asset group may not be recoverable.

A fair value assessment is performed on assets or asset groups identified as not being recoverable using a discounted cash flow analysis to determine if an impairment has occurred.

If an impairment has occurred, we recognize a loss for the difference between the carrying amount and the fair value of the asset or asset group.

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Cash flows are generally discounted using an interest rate commensurate with a weighted average cost of capital for a similar asset.

Long-lived assets held as of our 2019 emergence date were remeasured to fair value.

Refer to Note 3 – Fresh Start Accounting for further details.

Research and Development Expenditures

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We record derivative instruments on the balance sheet at their fair value as either assets or liabilities.

Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income (loss), depending on whether the derivative is designated as part of a hedge relationship, and if so, the type of hedge.

Changes in the fair value of derivatives are recorded each period in current earnings.

Foreign Currency

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Assets and liabilities of these foreign subsidiaries are translated using the exchange rates in effect at the balance sheet dates, and the resulting translation adjustments are included in “Accumulated Other Comprehensive Income (Loss)”, a component of Shareholders’ Equity (Deficiency).

For our subsidiaries that have a functional currency that differs from the currency of their balances and transactions, inventories, PP&E and other non-monetary assets and liabilities, together with their related elements of expense or income, are remeasured

All monetary assets and liabilities are remeasured into the functional currency at current exchange rates.

All revenues and expenses are translated into the functional currency at

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into the functional currency using historical exchange rates.

All monetary assets and liabilities are remeasured into the functional currency at current exchange rates.

All revenues and expenses are translated into the functional currency at average exchange rates.

average exchange rates.

Remeasurement gains and losses for these subsidiaries are recognized in our results of operations during the period incurred.

We record net foreign currency gains and losses on foreign currency derivatives (see “ Note 16 – Derivative Instruments ”) in “ Other Income (Expense), Net ” on the accompanying Consolidated Statements of Operations .

Devaluation charges on foreign currencies when incurred are reported in “Currency Devaluation Charges” on the accompanying Consolidated Statements of Operations .

We record net foreign currency gains and losses on foreign currency derivatives (see “Note 16 – Derivative Instruments”) and currency devaluation charges, when incurred, in “Other Income (Expense), Net” on the accompanying Consolidated Statements of Operations.

Share-Based Compensation

We account for all share-based payment awards, including shares issued under employee stock purchase plans, stock options, restricted shares, restricted share units and performance units by measuring these awards at the date of grant and recognizing the grant date fair value as an expense, net of expected forfeitures, over the service period, which is usually the vesting period.

We account for all share-based payment awards, including shares issued under restricted shares, restricted share units and performance units by measuring these awards at the date of grant and recognizing the grant date fair value as an expense, net of expected forfeitures, over the service period, which is usually the vesting period.

We account for taxes under the asset and liability method.

Income taxes have been provided based upon the tax laws and rates in the countries in which our operations are conducted and income is earned.

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we recognize lease expense for these leases on a straight-line basis over the lease term.

Beginning January 1, 2019, operating right of use (“ROU”) assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date.

Effective January 1, 2019, we adopted ASU No.

2016-02, Leases (Topic 842).

Upon adoption, operating right of use (“ROU”) assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date.

Operating leases in effect prior to January 1, 2019 were recognized at the present value of the remaining payments on the remaining lease term as of January 1, 2019.

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As most of our leases do not provide an implicit rate of return, we use our incremental borrowing rate, together with the lease term information available at commencement date of the lease, in determining the present value of lease payments, which is updated on a quarterly basis.

For adoption of Accounting Standards Update (“ASU”) No.

2016-02, Leases (Topic 842) issued by the Financial Accounting Standards Board (“FASB”) in February 2016 and the series of related updates that followed (collectively referred to as “Topic 842”), we used the December 31, 2018 incremental borrowing rate, for operating leases that commenced prior to December 31, 2018.

For certain equipment leases, such as copiers and vehicles, we account for the leases under a portfolio method.

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The remeasurement of our ROU assets was based on the market discount rate as of December 13, 2019.

See “ Note 4 – New Accounting Pronouncements ” and “ Note 12 – Leases ” for details on the impact of adopting the new leasing guidance.

Disputes, Litigation and Contingencies

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Revenue Recognition

The majority of our revenue is derived from short term contracts.

Subsequent to January 1, 2018, we account for revenue in accordance with ASU 2014-09, Revenue from Contracts with Customers (Topic 606) , and all of the related amendments, collectively referred to as “Topic 606”.

We account for revenue in accordance with ASU 2014-09, Revenue from Contracts with Customers (Topic 606) , and all of the related amendments, collectively referred to as “Topic 606”.

Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

As of January 1, 2018, we adopted the Topic 606 revenue recognition guidance and the comparative period information for 2017 has not been adjusted and continues to be reported under the previous revenue standard, the primary accounting policies for which are discussed below.

The majority of our revenue is derived from short term contracts.

Our services and products are generally sold based upon purchase orders, contracts or other legally enforceable arrangements with our customers that included fixed or determinable prices but do not generally include right of return provisions or other significant post-delivery obligations.

Our products are produced in a standard manufacturing operation, even if produced to our customer’s specifications.

Prior to the adoption of Topic 606, revenue was recognized for products when persuasive evidence of an arrangement existed, sales prices were fixed and determinable, title passed to the customer, collectability was reasonably assured, delivery occurred as directed by our customer and when the customer assumed the risks and rewards of ownership.

Revenue was recognized for services when they are rendered.

Both contract drilling and pipeline service revenue is contractual by nature and generally governed by day-rate based contracts.

We recognized revenue for day-rate contracts as the services were rendered.

See “ Note 23 – Revenues ” for details on revenue recognition disclosures.

The unmanned equipment that we lease to customers as operating leases consist primarily of drilling rental tools and artificial lift pumping equipment.

The unmanned equipment that we lease to customers under operating leases consist primarily of drilling rental tools and artificial lift pumping equipment.

These equipment rental revenues are generally provided based on call-out work orders that include fixed per unit prices and are derived from short-term contracts.

We include revenue from these leases within “Services Revenue” on our Consolidated Statement of Operations.

Contract Balances

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, contract assets (including unbilled receivables), and customer advances and deposits (contract liabilities classified as deferred revenues).

Receivables for products and services with customers, under Topic 606, are included in “Accounts Receivable, Net,” contract assets are included in “Other Current Assets” and contract liabilities are included in “Other Current Liabilities” on our Consolidated Balance Sheets .

Receivables for products and services with customers are included in “Accounts Receivable, Net,” contract assets are included in “Other Current Assets” and contract liabilities are included in “Other Current Liabilities” on our Consolidated Balance Sheets.

Consideration under certain contracts such as turnkey or lump sum contracts may be classified as contract assets as the invoicing occurs once the performance obligations have been satisfied while the customer simultaneously receives and consumes the benefits provided.

We also have receivables for work completed but not billed in which the rights to consideration are conditional and would be classified as contract assets.

These are primarily related to service contracts and are not material to our Consolidated Financial Statements .

We also have receivables for work completed on service contracts but not billed in which the rights to consideration are conditional and would be classified as contract assets.

We may also have contract liabilities and defer revenues for certain product sales that are not distinct from their installation.

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in Topic 606.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account.

A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.

Our principal business is to provide equipment and services to the oil and natural gas exploration and production industry, both on land and offshore, through our major product lines:

Production, Completions, Drilling and Evaluation, and Well Construction.

Generally, under Topic 606 our revenue is recognized for services over time as the services are rendered and we primarily utilize an output method such as time elapsed or footage drilled which coincides with how customers receive the benefit.

Generally, our revenue is recognized for services over time as the services are rendered and we primarily utilize an output method such as time elapsed or footage drilled which coincides with how customers receive the benefit.

Both contract drilling and pipeline service revenue is contractual by nature and generally governed by day-rate based contracts.

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Product sales are billed and recognized when control passes to the customer.

Our products are produced in a standard manufacturing operation, even

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if produced to our customer’s specifications.

Our products are produced in a standard manufacturing operation, even if produced to our customer’s specifications.

Revenues are recognized at the amount to which we have the right to invoice for services performed.

Our payment terms vary by the type and location of our customer and the products or services offered.

The term between invoicing and when payment is due is not significant.

For certain products or services and customer types, we require payment before the products or services are delivered to the customer and record as a contract liability.

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and (d) whether we are unable to utilize the product or direct it to another customer.

We account for individual products and services separately if they are distinct and the product or service is separately identifiable from other items in the contract and if a customer can benefit from it on its own or with other resources that are readily available to the customer.

We account for individual products and services separately if they are distinct and the product or service is separately

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identifiable from other items in the contract and if a customer can benefit from it on its own or with other resources that are readily available to the customer.

The consideration, including any discounts, is allocated between separate products and services based on their standalone selling prices.

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For items not sold separately (e.g.

term software licenses in our Production product line), we estimate standalone selling prices using the adjusted market assessment approach.

term software licenses in our Completion and Production product line), we estimate standalone selling prices using the adjusted market assessment approach.

Costs of relocating equipment without contracts are expensed as incurred.

Demobilization fees received are recognized over the contract period and may be constrained to the amount that it is probable a significant reversal in the fees will not occur.

When determining if such variable consideration should be constrained, management considers whether there are factors outside the Company’s control that could result in a significant reversal of revenue as well as the likelihood and magnitude of such a potential reversal.

The nature of our contracts gives rise to several types of variable consideration, including claims and lost-in-hole charges.

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We do not estimate revenue associated with these types of variable consideration.

We incur rebillable expenses including shipping and handling, third-party inspection and repairs, and customs costs and duties.

We recognize the revenue associated with these rebillable expenses when reimbursed by customers as “Product Revenues” and all related costs as “Cost of Products” in the accompanying Consolidated Statements of Operations.

Under certain contracts, we may incur rebillable expenses including shipping and handling, third-party inspection and repairs, and customs costs and duties.

If reimbursable by customers we recognize the revenue associated with these rebillable expenses as “Product Revenues” and all related costs as “Cost of Products” in the accompanying Consolidated Statements of Operations.

We provide certain assurance warranties on product sales which range from one to five years but do not offer extended warranties on any of our products or services.

These assurance warranties are not separate performance obligations thus no portion of the transaction price is allocated to our obligations under the assurance warranties.

These assurance warranties are not separate performance obligations thus no portion of the transaction price is allocated to our obligations under these warranties.

Earnings (Loss) per Share

Basic earnings (loss) per share for all periods presented equals net income (loss) divided by the weighted average number of our shares outstanding during the period including participating securities.

Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of our shares outstanding during the period including participating securities, adjusted for the dilutive effect of our stock options, restricted shares and performance units, when applicable.

Basic earnings (loss) per share for all periods presented equals net income (loss) divided by the weighted average shares outstanding during the period including participating securities.

Diluted earnings (loss) per share is computed by dividing net income (loss) by our weighted average shares outstanding during the period including participating securities and any potential dilutive shares, when applicable.

Unvested share-based payment awards and other instruments issued by the Company that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are participating securities and are included in the computation of earnings per share following the two-class method.

Accordingly, we included restricted share awards and the outstanding warrant until it expired on May 21, 2019, which contained the right to receive dividends, in the computation of both basic and diluted earnings per share when dilutive.

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Emergence from Chapter 11 Bankruptcy Proceedings

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The RSA included certain milestones for the progress of the upcoming court proceedings, which included the dates by which the Weatherford Parties were required to, among other things, obtain certain court orders and complete the Transaction.

In addition, the parties to the RSA had the right to terminate the RSA and their support for the Transaction under certain circumstances.

On June 28, 2019, the Weatherford Parties commenced a solicitation for acceptance of their prepackaged plan of reorganization (“Plan”) by causing the Plan and the corresponding disclosure statement to be distributed to certain creditors of the Company that were entitled to vote on the Plan.

On July 1, 2019, Weatherford Ireland, Weatherford Bermuda, and Weatherford Delaware, filed voluntary petitions under Chapter 11 of the U.S.

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Any efforts to enforce such payment obligations under the unsecured notes or other accelerated obligations of the Weatherford Parties were automatically stayed as a result of the Cases, and the creditors’ rights of enforcement in respect of the unsecured notes and other accelerated obligations of the Weatherford Parties were subject to the applicable provisions of the Bankruptcy Code.

In addition, all of the Weatherford Parties’ prepetition unsecured senior notes and related unpaid interest were classified as “ Liabilities Subject to Compromise ” on our Consolidated Balance Sheets during bankruptcy as further defined herein and in subsequent disclosures throughout and with respect to the Predecessor as shown in “ Note 3 – Fresh Start Accounting ”.

In addition, all of the Weatherford

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Parties’ prepetition unsecured senior notes and related unpaid interest were classified as “Liabilities Subject to Compromise” on our 2019 Consolidated Balance Sheets during bankruptcy as further defined herein and in subsequent disclosures throughout and with respect to the Predecessor as shown in “Note 3 – Fresh Start Accounting”.

The Weatherford Parties’ Term Loan Agreement required a quarterly payment of $ 12.5 million plus interest that became due on June 30, 2019.

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On July 1, 2019, the Weatherford Parties and the Credit Agreement Lenders under the Amended and Restated Credit Agreement (the “A&R Credit Agreement”), dated as of May 9, 2016, among WOFS Assurance Limited and Weatherford Bermuda, as borrowers, the Company, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders from time to time party thereto entered into a forbearance agreement (the “Credit Agreement Forbearance Agreement”) with respect to certain defaults under the A&R Credit Agreement, including those arising from the Weatherford Parties’ commencement of the Cases.

Specifically, under the Credit Agreement Forbearance Agreement, the Credit Agreement Lenders agreed to forbear from exercising their rights and remedies available to them due to the Specified Defaults defined in the agreement, including the right to accelerate any indebtedness, for a specified period of time.

Under the terms of the Credit Agreement Forbearance Agreement, the Weatherford Parties paid a fee for the ratable account of the Credit Agreement Lenders in an amount equal to 0.25 % on the outstanding principal amount of the loans and total letter of credit exposure under the A&R Credit Agreement.

Additionally, (i) to the extent such entities were not already guarantors under the A&R Credit Agreement, all subsidiaries of the Company who were guarantors under the DIP Credit Agreement (defined below) joined as guarantors under the A&R Credit Agreement and (ii) all U.S.

and Canadian subsidiaries of the Company granted a second lien security interest in favor of the Credit Agreement Lenders in the same assets that such U.S.

and Canadian subsidiaries pledged a first lien security interest in under the DIP Credit Agreement;

provided that the aggregate amount of the guaranteed obligations to be secured under the A&R Credit Agreement did not exceed $ 100 million ;

and provided, further, that if the obligations under the A&R Credit Agreement were not paid in full by our emergence date, as amended, such second lien security

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interest of the Credit Agreement Lenders shall automatically transition from second liens to pari passu liens with the liens under the DIP Credit Agreement.

On July 1, 2019, the Weatherford Parties and the Term Loan Lenders under the Term Loan Agreement, dated as of May 4, 2016, among Weatherford Bermuda, as borrower, the Company, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders from time to time party thereto (the “Term Loan Agreement”) entered into a forbearance agreement (the “Term Loan Forbearance Agreement”) with respect to certain defaults under the Term Loan Agreement.

Specifically, under the Term Loan Forbearance Agreement, the Term Loan Lenders agreed to forbear from exercising their rights and remedies available to them due to the Specified Defaults defined in the agreement, including the right to accelerate any indebtedness, for a specified period of time.

On July 3, 2019, the Company repaid in full its outstanding indebtedness under the Term Loan.

On July 1, 2019, the Weatherford Parties and the 364-Day Lenders under the 364-Day Revolving Credit Agreement, dated August 16, 2018, among Weatherford Bermuda, as borrower, the other borrowers party thereto, the Company, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders from time to time party thereto (“364-Day Credit Agreement”) entered into a forbearance agreement (the “364-Day Revolving Forbearance Agreement”) with respect to certain defaults under the 364-Day Credit Agreement.

Specifically, under the 364-Day Revolving Forbearance Agreement, the 364-Day Lenders agreed to forbear from exercising their rights and remedies available to them due to the Specified Defaults defined in the agreement, including the right to accelerate any indebtedness, for a specified period of time.

On July 3, 2019, the Company repaid in full its outstanding indebtedness under the 364-Day Revolving Credit Agreement.

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The Backstop Commitment Agreement Amendment provided for (i) the joinder of the Additional Commitment Parties to the Backstop Commitment Agreement, (ii) the increase in the backstop commitment by $ 350 million (the “Increased Commitment”) from $ 1.25 billion to up to $ 1.6 billion, and (iii) an amendment to the Backstop Commitment Agreement to account for the changes reflected in the Third RSA Amendment.

Subject to the terms and conditions contained in the Backstop Commitment Agreement, the Consenting Creditors agreed to purchase any Exit Notes that were not duly subscribed for pursuant to the rights offering at a price equal to $1,000 per $1,000 in principal amount of the Exit Notes purchased by such Commitment Party.

On July 1, 2019, as consideration for the commitment, the Weatherford Parties made an aggregate payment of $ 62.5 million in cash to the Commitment Parties.

Except under certain circumstances set forth in the Backstop Commitment Agreement, the payment was non-refundable, regardless of the principal amount of unsubscribed Exit Notes (if any) purchased by the Commitment Parties.

As consideration for the Increased Commitment agreed to on September 9, 2019, the Weatherford Parties made an aggregate payment of $ 18.7 million in cash to certain of the Commitment Parties upon our emergence date.

Subject to certain termination rights, the payment was non-refundable, regardless of the principal amount of unsubscribed Exit Notes (if any) purchased by the Commitment Parties.

The transactions contemplated by the Backstop Commitment Agreement were conditioned upon the satisfaction or waiver of customary conditions for transactions of this nature, including, without limitation, that (i) the Bankruptcy Court shall have approved the rights offering, (ii) the Bankruptcy Court shall have confirmed the Plan and (iii) the rights offering shall have been conducted, in all material respects, in accordance with the approval of the Bankruptcy Court, the Plan and the Backstop Commitment Agreement.

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Table of Contents Item 8 | Notes to the Consolidated Financial Statements

principal amount of the Exit Notes purchased by such Commitment Party.

On July 1, 2019, as consideration for the commitment, the Weatherford Parties made an aggregate payment of $ 62.5 million in cash to the Commitment Parties.

Debtor in Possession Credit Agreement

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The facilities consisted of (a) a DIP revolving credit facility in the principal amount of up to $ 750 million provided by banks or other lenders and (b) a DIP term loan facility in the amount of up to $ 1.0 billion, which was fully backstopped by the Consenting Creditors.

The DIP Credit Agreement matured on the earlier of (i) the date that is 12 months after the Weatherford Parties’ entry into the DIP Credit Agreement or (ii) the date of completion of the Transaction.

The DIP Credit Agreement bore interest (i) with respect to Eurodollar borrowings, based on an adjusted LIBOR rate plus an applicable margin of 3.00 % , with a 0.00 % LIBOR floor and (ii) with respect to alternate base rate borrowings, a base rate plus an applicable margin of 2.00 % .

In addition to paying interest on outstanding principal amounts under the DIP Credit Agreement, the Weatherford Parties were required to pay an unused commitment fee to the revolving facility lenders in respect of the unutilized DIP revolving facility commitments at a rate equal to 0.375 % per annum on the average daily amount of the unutilized revolving facility commitments.

The DIP Credit Agreement included a minimum liquidity covenant of $ 150 million and was secured by substantially all the personal assets and properties of the Weatherford Parties and certain of their subsidiaries.

The DIP Credit Agreement was also guaranteed on an unsecured basis by certain other subsidiaries of the Weatherford Parties.

Through the term of the DIP Credit Agreement, we were in compliance with our covenants under the DIP Credit Agreement.

The DIP Credit Agreement matured on the date of completion of the Transaction.

On July 3, 2019, the Weatherford Parties borrowed approximately $ 1.4 billion under the DIP Credit Agreement and the proceeds were used to repay certain prepetition indebtedness, cash collateralize certain obligations with respect to letters of credit and similar instruments and finance the working capital needs and general corporate purposes of the Weatherford Parties and certain of their subsidiaries.

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In addition, the Company cash collateralized approximately $ 271 million of letters of credit and similar instruments with borrowings from the DIP Credit Agreement.

See “ Note 13 – Short-term Borrowings and Other Debt Obligations ” for additional details.

We repaid our DIP Credit Agreement borrowings in full on the Effective Date.

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The Exit Notes were issued in lieu of the two tranches of new unsecured notes in aggregate principal amount of $ 2.5 billion previously contemplated by the original RSA.

The Exit Notes bear interest at a rate of 11 % per annum and otherwise generally have the terms set forth in the form of New Senior Unsecured Notes Indenture (“Notes Indenture”) with modifications to reflect the amendments contemplated by the Third RSA Amendment, the removal of the 125 % of Consolidated Cash Flow prong in the Notes Indenture and the addition of a covenant requiring the Company to use commercially reasonable efforts to obtain and maintain a rating for the Exit Notes from both Standard & Poor’s and Moody’s Investors Service.

On September 11, 2019, the Transaction was approved through the confirmation of the Plan filed in the Cases.

The amended RSA and the confirmed Plan contemplated a comprehensive deleveraging of our balance sheet and provided, in pertinent part, and were executed as follows (as further described in later paragraphs):

• Our existing unsecured notes were cancelled and exchanged for 99 % of the ordinary shares of the reorganized Company (“New Common Stock”) and the Weatherford Parties issued a single tranche of up to $ 2.1 billion aggregate principal amount of new Exit Notes upon emergence from bankruptcy, consisting of up to $ 1.6 billion of Exit Rights Offering Notes (fully backstopped by Commitment Parties in the Backstop Commitment Agreement) issued for cash to holders of subscription rights issued in a rights offering and $ 500 million of Exit Takeback Notes issued on a pro rata basis with a five-year maturity.

• All trade claims against the Company whether arising prior to or after the commencement of the Cases were paid in full in the ordinary course of business.

• Our existing equity was cancelled and exchanged for 1 % of the New Common Stock and four-year warrants to purchase 10 % of the New Common Stock, both subject to dilution on account of the equity issued pursuant

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Table of Contents Item 8 | Notes to the Consolidated Financial Statements

The amended RSA and the confirmed Plan contemplated a comprehensive deleveraging of our balance sheet and provided, in pertinent part, as follows (as further described in later paragraphs):

Our existing unsecured notes would be cancelled and exchanged for 99 % of the ordinary shares of the reorganized Company (“New Common Stock”) and the Weatherford Parties would issue a single tranche of up to $ 2.1 billion aggregate principal amount of new Exit Notes upon emergence from bankruptcy, consisting of up to $ 1.6 billion of Exit Rights Offering Notes (fully backstopped by Commitment Parties in the Backstop Commitment Agreement) issued for cash to holders of subscription rights issued in a rights offering and $ 500 million of Exit Takeback Notes issued on a pro rata basis with a five-year maturity.

All trade claims against the Company whether arising prior to or after the commencement of the Cases would be paid in full in the ordinary course of business.

Our existing equity would be cancelled and exchanged for 1 % of the New Common Stock and four-year warrants to purchase 10 % of the New Common Stock, both subject to dilution on account of the equity issued pursuant to the management incentive plan.

The strike price of the warrants was expected to be set at an equity value at which the noteholders would receive a recovery equal to par as of the date of the commencement of the Cases in respect of the existing unsecured notes and all other general unsecured claims that were pari passu with the existing unsecured notes.

to the management incentive plan.

The strike price of the warrants was set at an equity value at which the noteholders received a recovery equal to par as of the date of the commencement of the Cases in respect of the existing unsecured notes and all other general unsecured claims that were pari passu with the existing unsecured notes.

Our affiliates entities that did not file voluntary petitions under the Bankruptcy Code continued operating their businesses and facilities without disruption to customers, vendors, partners or employees.

The Plan and first day relief provided that vendors and other unsecured creditors could continue to work with the non-debtor affiliates on existing terms and would be paid in the ordinary course of business (in the case of creditors of the Weatherford Parties, following consummation of the Plan).

All existing customer and vendor contracts remained in place and were serviced in the ordinary course of business.

Weatherford Bermuda commenced provisional liquidation proceedings (“Bermuda Proceedings”) pursuant to the Bermuda Companies Act 1981 by presenting a winding up petition to the Supreme Court of Bermuda (“Bermuda Court”).

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Since the commencement of the Cases until emergence, the Weatherford Parties continued to operate their businesses as debtors-in-possession under the jurisdiction of and in accordance with the applicable provisions of the Bankruptcy Code, orders of the Bankruptcy Court, the Irish Examinership Proceeding and the Bermuda Proceeding.

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Table of Contents Item 8 | Notes to the Consolidated Financial Statements

On the Effective Date of December 13, 2019, except as noted below:

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(3) all outstanding obligations under our unsecured senior and exchangeable notes were cancelled and the applicable agreements governing such obligations were terminated;

for additional details see “ Note 14 – Long-term Debt ”;

(4) the senior secured superpriority debtor-in-possession credit agreement (the “DIP Credit Agreement”) the Company previously entered into was paid in full and terminated;

for additional details see “ Note 13 – Short-term Borrowings and Other Debt Obligations ”;

(5) the Company issued a $ 2.1 billion aggregate principal amount of unsecured 11.00 % Exit Notes due 2024;

for additional details see “ Note 14 – Long-term Debt ”;

for additional details see “Note 14 – Borrowings and Other Debt Obligations”;

(6) the Company entered into a senior secured asset-based revolving credit agreement in an aggregate amount of $ 450 million (the “ABL Credit Agreement ” ) with the lenders party thereto and Wells Fargo Bank, N.A.

as administrative agent;

for additional details see Note 13 – Short-term Borrowings and Other Debt Obligations ;

for additional details see Note 14 – Borrowings and Other Debt Obligations;

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Table of Contents Item 8 | Notes to the Consolidated Financial Statements

(7) the Company entered into a senior secured letter of credit agreement in an aggregate amount of $ 195 million (the “LC Credit Agreement”) for issuance of bid and performance letters of credit;

for additional details see Note 13 – Short-term Borrowings and Other Debt Obligations ;

for additional details see Note 14 – Borrowings and Other Debt Obligations;

(8) the Company issued 69,999,954 shares of Successor new ordinary shares (“New Ordinary Shares”) to the holders of the Company’s existing senior notes and holders of the existing ordinary shares (“Old Ordinary Shares”);

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Prepetition Charges

Expenses, gains and losses that are realized or incurred before July 1, 2019 and in relation to the Cases are recorded under the caption “ Prepetition Charges ” on our Consolidated Statements of Operations .

Expenses, gains and losses were realized or incurred before July 1, 2019 and in relation to the Cases are recorded under the caption “Prepetition Charges” on our 2019 Predecessor Consolidated Statements of Operations.

The $ 86 million of prepetition charges primarily consisted of professional and other fees related to the Cases.

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Table of Contents Item 8 | Notes to the Consolidated Financial Statements

Reorganization Items

Any expenses, gains and losses that are realized or incurred as of or subsequent to the Petition Date and as a direct result of the Cases are recorded under “Reorganization Items” on our Consolidated Statements of Operations for the Predecessor and Successor Periods and consisted of the following:

Successor Predecessor

Period From Period From

12/14/2019 1/1/2019

Year Ended through through

Reorganization Gain (Expense) (Dollars in millions) 12/31/2020 12/31/2019 12/13/2019

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The contractual interest expense on our Senior and Exchangeable Senior Notes is in excess of recorded interest expense on these notes by $ 257 million during the bankruptcy proceeding from the Petition Date until the Effective Date and was not included as interest expense on the Consolidated Statements of Operations for the Predecessor Period because the Company discontinued accruing interest subsequent to the Petition Date in accordance with ASC 852.

We did not make any interest payments on our Senior and Exchangeable Senior Notes subsequent to the commencement of the Cases.

We did not make any interest payments on Predecessor Senior and Exchangeable Senior Notes subsequent to the commencement of the Cases.

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Upon emergence from bankruptcy, we qualified for and adopted Fresh Start Accounting in accordance with ASC 852, which resulted in the Company becoming a new entity for financial reporting purposes because (1) the holders of the then existing common shares of the Predecessor received less than 50 percent of the new common shares of the Successor outstanding upon emergence and (2) the reorganization value of the Company’s assets immediately prior to confirmation of the Plan was less than the total of all post-petition liabilities and allowed claims.

The reorganization value derived from the range of enterprise values associated with the Plan was allocated to the Company’s identifiable tangible and intangible assets and liabilities based on their fair values (except for deferred income taxes) with the remaining excess value allocated to goodwill in accordance with ASC 805 – Business Combinations.

The reorganization value derived from the range of enterprise values associated with the Plan was allocated to the Company’s identifiable tangible and intangible assets and liabilities based on their estimated fair values (except for deferred income taxes) with the remaining excess value allocated to goodwill in accordance with ASC 805 – Business Combinations.

The amount of deferred income taxes recorded was determined in accordance with ASC 740 – Income Taxes.

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The following table reconciles the enterprise value to the estimated fair value of our Successor common shares as of the Fresh Start Reporting Date:

(Dollars in millions)

Fresh Start Reporting Date

(Dollars in millions) Fresh Start Reporting Date

Enterprise Value $ 4,516

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The following table reconciles the enterprise value to the reorganization value of the Successor’s assets to be allocated to the Company’s individual assets as of the Fresh Start Reporting Date:

(Dollars in millions)

Fresh Start Reporting Date

(Dollars in millions) Fresh Start Reporting Date

Enterprise Value $ 4,516

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(i) a calculation of the present value of future cash flows based on our financial projections, and (ii) a peer group trading analysis.

The enterprise value and corresponding equity value are dependent upon achieving the future financial results set forth in our valuations, as well as the realization of certain other assumptions.

All estimates, assumptions, valuations and financial projections, including the fair value adjustments, the financial projections, the

The enterprise value and corresponding equity value were dependent upon achieving the future financial results set forth in our valuations, as well as the realization of certain other

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Table of Contents Item 8 | Notes to the Consolidated Financial Statements

enterprise value and equity value projections, are inherently subject to significant uncertainties and the resolution of contingencies beyond our control.

Accordingly, we cannot assure you that the estimates, assumptions, valuations or financial projections will be realized, and actual results could vary materially.

All estimates, assumptions, valuations and financial projections, including the fair value adjustments, the financial projections, the enterprise value and equity value projections, are inherently subject to significant uncertainties and the resolution of contingencies beyond our control.

Accordingly, upon emergence we could not assure that the estimates, assumptions, valuations or financial projections would be realized, and actual results could vary materially.

Valuation Process

The fair values of the Company’s principal assets, including inventory, rental and service equipment, real property, and intangible assets were estimated with the assistance of third-party valuation advisors.

In addition, we also estimated the fair value of the Company’s lease liabilities, Exit Notes, and New Warrants issued.

In addition, we also estimated the fair value of the Company’s lease liabilities, Exit Notes, and New Warrants.

The fair value of the inventory was determined by using both a cost approach and income approach.

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The present value of the after tax cash flows for all Intangible Assets were estimated based on a discount rate between 12.8 % and 16 %.

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Table of Contents Item 8 | Notes to the Consolidated Financial Statements

Lease liabilities and right of use assets

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Based upon the corresponding lease term, the IBR ranged from 8.45 % to 10.35 %.

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Table of Contents Item 8 | Notes to the Consolidated Financial Statements

Upon emergence from bankruptcy on December 13, 2019, the ROU assets were revalued based upon the present value of market-based rent.

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As of December 13, 2019

Reorganization

(Dollars in millions)

Adjustments (1)

Reorganization Accounting

(Dollars in millions) Predecessor Adjustments (1) Adjustments Successor

Cash and Cash Equivalents $ 641 $ ( 148 ) (2) $ — $ 493

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Property, Plant and Equipment, Net 1,838 — 289 (19) 2,127

Goodwill — — 239 (20) 239

Intangible Assets, Net 166 — 957 (21) 1,123

Other Non-current Assets 336 25 (5) 27 (22) 388

Total Assets $ 6,218 $ ( 264 ) $ 1,414 $ 7,368

Debtor in Possession Financing $ 1,528 $ ( 1,528 ) (6) $ — $ —

17 unchanged sentences

Accumulated Other Comprehensive Income

(Loss) ( 1,697 ) — 1,697 (27) —

Weatherford Shareholders’ Equity (Deficiency) ( 5,645 ) 7,132 1,410 2,897

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(17) Changes in Inventories, Net reflect the fair value adjustment of $ 84 million.

Successor Fair Value

Predecessor Historical Value

Successor Fair Value Predecessor Historical Value

Raw Materials, Components and Supplies 78 $ 78

1 unchanged sentence

Finished Goods 858 938

Totals $ 987 $ 1,071

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(19) Changes in Property, Plant and Equipment, Net reflect the fair value adjustment of $ 289 million.

Successor Fair Value

Predecessor Historical Value

Successor Fair Value Predecessor Historical Value

Land, Buildings and Leasehold Improvements $ 569 $ 1,205

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(21) Changes in Intangible Assets reflect the fair value adjustment of $ 957 million.

Successor Fair Value

Predecessor Historical Value

Successor Fair Value Predecessor Historical Value

Developed and Acquired Technology $ 728 $ 74

Trade Name 395 —

Customer Relationships and Contracts — 39

Totals $ 1,123 $ 166

(22) Reflects the fair value adjustment to the increase the Company’s Right of Use Assets by $ 13 million and Non-current Deferred Tax Asset by $ 14 million.

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Table of Contents Item 8 | Notes to the Consolidated Financial Statements

New Accounting Pronouncements

Accounting Standards Adopted in 2019

Effective January 1, 2019, we adopted ASU No.

2016-02, Leases (Topic 842) issued by the FASB in February 2016 and the series of related updates that followed (collectively referred to as “Topic 842”), which requires a lessee to recognize a ROU lease asset and lease liability for all qualifying leases with terms longer than twelve months on the balance sheet, including those classified as operating leases under previously existing U.S.

The ASU also changes the definition of a lease and requires expanded quantitative and qualitative disclosures for both lessees and lessors.

We elected to adopt Topic 842 using the modified retrospective approach.

As such, comparative financial information for prior periods has not been restated and continues to be reported under the previous accounting guidance for those periods.

We did not elect the hindsight practical expedient.

See “ Note 12 – Leases ” for additional lease information and practical expedients elected.

The impact of Topic 842 on our consolidated balance sheet beginning January 1, 2019 was through the recognition of ROU assets and lease liabilities for operating leases, while our accounting for finance leases (previously referred to as capital leases) remains substantially unchanged.

Amounts recognized at January 1, 2019 for operating leases were as follows:

Impairments and Other Charges

We recorded the following in “Impairments and Other Charges” on the accompanying Consolidated Statements of Operations:

Successor Predecessor

Period From Period From

Year 12/14/2019 1/1/2019

Ended through through Year Ended

(Dollars in millions) 12/31/2020 12/31/2019 12/13/2019 12/31/2018

Balance at January 1, 2019

Assets and Liabilities:

Other Non-Current Assets

Other Current Liabilities

Other Non-Current Liabilities

In February 2018, the FASB issued ASU 2018-02 , Income Statement-Reporting Comprehensive Income (Topic 220):

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income , which permits a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act.

We adopted this standard in the first quarter of 2019 and an election was not made to reclassify the income tax effects of the Tax Cuts and Jobs Act from Accumulated Other Comprehensive Income to retained earnings.

In July 2017, the FASB issued ASU 2017-11, Part I Accounting for Certain Financial Instruments with Down Round Features , which amends the accounting for certain equity-linked financial instruments and states a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock.

For an equity-linked financial instrument no longer accounted for as a liability at fair value, the amendments require a down round to be treated as a dividend and as a reduction of income available to ordinary shareholders in basic earnings per share.

We adopted this standard in the first quarter of 2019 on a retrospective basis and the adoption did not have a significant impact on our Consolidated Financial Statements.

In August 2018, the FASB issued ASU 2018-14, Compensation — Retirement Benefits — Defined Benefit Plans — General (Subtopic 715-20):

Disclosure Framework — Changes to the Disclosure Requirements for Defined Benefit Plans, which makes minor changes to the disclosure requirements for employers that sponsor defined benefit pension and other post-retirement benefit plans.

We adopted ASU 2018-14 for the year ended December 31, 2019 and the adoption did not have a significant impact on the disclosures to our Consolidated Financial Statements .

Long-lived Asset Impairments $ 814 $ — $ 20 $ 151

Goodwill Impairment 239 — 730 1,917

Inventory Charges 138 — 117 —

Asset Write-downs and Rigs Related Charges 11 — 132 58

Other Charges, Net 34 — 105 29

Total Impairment and Other Charges $ 1,236 $ — $ 1,104 $ 2,155

We recognized long-lived asset and goodwill impairments as further described in “Note 10 – Long-Lived Asset Impairments” and “Note 11 – Goodwill and Intangible Assets”, respectively and inventory charges as further described in “Note 7 – Inventories, Net”.

See also “Note 8 – Business Combinations and Divestitures.”

New Accounting Pronouncements

Accounting Standards Adopted

On January 1, 2020, we adopted Financial Accounting Standards Board Accounting Standards Update No.

2016-13, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss impairment methodology in previous U.S.

GAAP with a methodology (Current Expected Credit Losses model, or CECL) that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates.

We estimate expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.

The updated guidance applies to (i) loans, accounts receivable, trade receivables, and other financial assets measured at amortized cost, and (ii) loan commitments and other off-balance sheet credit exposures.

The adoption of this standard update did not have a material impact on our 2020 Consolidated Financial Statements.

Accounting Standards Issued Not Yet Adopted

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, adds and modifies certain disclosure requirements for fair value measurements as part of its disclosure framework project.

The ASU is effective beginning with the first quarter of 2020, and early adoption is permitted.

The ASU is required to be applied retrospectively, except the new Level 3 disclosure requirements which are applied prospectively.

We evaluated the potential impact of this new standard and concluded that the adoption of the ASU will not have a significant impact on the disclosures to our Consolidated Financial Statements .

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss impairment methodology in current U.S.

GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable

Evaluations of all other new accounting pronouncements that have been issued, but not yet effective are on-going, and at this time are not expected to have a material impact on our Consolidated Financial Statements.

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Table of Contents Item 8 | Notes to the Consolidated Financial Statements

information to determine credit loss estimates.

The guidance requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.

The amended guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

We will adopt the new standard, including subsequent amendments, on the effective date of January 1, 2020.

We evaluated the potential impact of this new standard and concluded that the adoption of the ASU will not have a significant impact on our Consolidated Financial Statements.

Accounts Receivable Factoring and Other Receivables

Accounts Receivable Factoring

From time to time, we participate in factoring arrangements to sell accounts receivable to third-party financial institutions.

During the Successor Period, we sold accounts receivable of $ 7 million , recognized an insignificant loss and received cash proceeds of $ 7 million .

In the 2019 Predecessor Period, we sold accounts receivable of $ 199 million , recognized a loss of $ 1 million and received cash proceeds of $ 186 million .

For the full year 2019, we sold a total combined amount of accounts receivable of $ 206 million , recognized a loss of $ 1 million and received cash proceeds totaling $ 193 million on these sales.

In 2018 , we sold accounts receivables of $ 382 million , recognized a loss of $ 2 million and received cash proceeds totaling $ 373 million on these sales.

In 2017 , we sold accounts receivables of $ 227 million , recognized a loss of $ 1 million and received cash proceeds totaling $ 223 million on these sales.

Our factoring transactions were recognized as sales, and the proceeds are included as operating cash flows in our Consolidated Statements of Cash Flows.

In the first quarter of 2017, we converted trade receivables of $ 65 million into a note from a customer with a face value of $ 65 million .

The note had a three -year term at a 4.625 % stated interest rate.

During the second quarter of 2017, we sold the note for $ 59 million .

The loss on sale of accounts receivable was immaterial for all periods.

The following table presents accounts receivable sold and the cash proceeds, net of discount and hold-back.

Successor Predecessor

Period From Period From

Year 12/14/2019 1/1/2019 Year

Ended through through Ended

(Dollars in millions) 12/31/2020 12/31/2019 12/13/2019 12/31/2018

Accounts Receivable Sold $ 90 $ 7 $ 199 $ 382

Cash Proceeds from Sale of Accounts Receivable $ 79 $ 7 $ 186 $ 373

Inventories, Net

Inventories, net of reserves, by category were as follows:

Inventories, net of reserves of $ 119 million and $ 0 as of December 31, 2020 and December 31, 2019, respectively, by category were as follows:

(Dollars in millions) 2020 2019

Raw Materials, Components and Supplies

Work in Process

Finished Goods $ 655 $ 830

During the 2019 Predecessor Period, and years ended December 31, 2018 and 2017 , we recognized inventory write-off and other related charges, including excess and obsolete charges, totaling $ 159 million , $ 80 million and $ 540 million , respectively.

These charges were largely attributable to the downturn in the oil and gas industry, where certain inventory has been deemed commercially unviable or technologically obsolete considering current and future demand.

Raw Materials, Components and Supplies 62 142

Total Inventory $ 717 $ 972

During the 2020 and 2019 Successor Periods and the 2019 and 2018 Predecessor Periods, inventory charges were $ 210 million, $ 0 , $ 159 million and $ 80 million, respectively.

Inventory charges recognized included write-downs for excess and obsolete inventory considered commercially unviable or technologically obsolete considering current and future demand, as a result of the volatility in oil and gas commodity demand, the downturn in the oil and gas industry and in 2020, the impact of the COVID-19 pandemic.

These charges were recognized in the following captions on our Consolidated Statements of Operations:

Successor Predecessor

Period From Period From

Year 12/14/2019 1/1/2019 Year

Ended through through Ended

(Dollars in millions) 12/31/2020 12/31/2019 12/13/2019 12/31/2018

Inventory Charges in “Impairments and Other Charges” $ 138 $ — $ 117 $ —

Inventory Charges in “Cost of Products” 57 — 18 80

Inventory Charges in “Restructuring Charges” 15 — 24 —

Total Inventory Charges $ 210 $ — $ 159 $ 80

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Business Combinations and Divestitures

On March 26, 2018, we acquired the remaining 50 % equity interest in our Qatari joint venture that we previously accounted for as an equity method investment and consolidated the entity.

The total consideration to purchase the remaining equity interest was $ 87 million , which is comprised of a cash consideration of $ 72 million and an estimated contingent consideration of $ 15 million related to services the Qatari entity will render under new contracts.

Of the $ 72 million in cash consideration, $ 48 million was paid in accordance with closing terms through the joint venture, with the remaining payment of $ 24 million to be paid two years from closing.

As a result of this step acquisition transaction with a change in control, we remeasured our previously held equity investment to fair value and recognized a $ 12 million gain.

The Level 3 fair value of the acquisition was determined using an income approach.

The unobservable inputs to the income approach included the Qatari entity’s estimated future cash flows and estimates of discount rates commensurate with the entity’s risks.

Upon consolidation, we recognized intangible assets of $ 22 million , PP&E of $ 25 million , goodwill of $ 27 million , other current assets of $ 16 million and other liabilities of $ 43 million as a result of the purchase accounting assessment.

We did not have any acquisitions of businesses during the years ended December 31, 2020 or 2019.

In the 2018 Predecessor Period we acquired the remaining 50 % equity interest in our Qatari joint venture that we previously consolidated and accounted for as an equity method investment.

The total consideration to purchase the remaining equity interest was $ 87 million, which is comprised of a cash consideration of $ 72 million ($ 48 million in the year of closing and $ 24 million deferred consideration to be paid two years from closing) and an estimated contingent consideration of $ 15 million related to services the Qatari entity will render under new contracts.

As a result of this step acquisition transaction with a change in control, we remeasured our previously held equity investment to fair value and recognized a $ 12 million gain in the 2018 Predecessor Period.

We paid the $ 24 million deferred consideration in the 2020 Successor Period.

We did not have any significant divestitures of businesses during the Successor year ended December 31, 2020.

On April 30, 2019, we completed the sale of our Reservoir Solutions business, also known as our laboratory services business to Oil & Gas Labs, LLC, an affiliate of CSL Capital Management, L.P., for an aggregate purchase price of $ 206 million in cash, subject to escrow release and customary post-closing working capital adjustments.

The business disposition included our laboratory and geological analysis business, including the transfer of substantially all personnel and associated contracts related to the business.

We recognized a gain of $ 117 million and divested a carrying amount of $ 61 million in net assets previously included in held for sale.

We recognized a gain of $ 117 million and divested a carrying amount of $ 61 million in net assets.

On April 30, 2019, we completed the sale of our surface data logging business to Excellence Logging for $ 50 million in total consideration, subject to customary post-closing working capital adjustments.

The business disposition included our surface data logging equipment, technology and associated contracts related to the business.

We recognized an insignificant loss and divested a carrying amount of $ 34 million in net assets previously included in held for sale.

In the first quarter of 2019, we completed the final closings in a series of closings pursuant to the purchase and sale agreements (“Agreements”) entered into with ADES International Holding Ltd.

We entered into the Agreements in July of 2018 to sell our land drilling rig operations in Algeria, Kuwait and Saudi Arabia, as well as two idle land rigs in Iraq, for an aggregate purchase price of $ 288 million to be completed in a series of closings.

As a result of entering into certain purchase and sale agreements as asset sales, we recognized asset write-down charges of $ 58 million for deferred mobilization costs and other rigs related assets as such costs were no longer recoverable.

During the third quarter of 2018, we recorded an $ 18 million charge to “Long-Lived Asset Impairments, Asset Write-Downs and Other” in our Consolidated Statements of Operations to correct an immaterial error relating to our estimates of recoverability of certain assets associated with the original and ongoing valuation of the assets and liabilities classified as held for sale associated with the planned disposition of our land drilling rig operations.

We received the remaining gross proceeds of $ 72 million and recognized a loss of $ 6 million in the first quarter of 2019.

The carrying amounts of net assets divested previously included in held for sale was $ 66 million .

In the fourth quarter of 2018, we received gross proceeds of $ 216 million and recognized a loss of $ 9 million .

The carrying amount of the assets and liabilities held for sale sold in 2018 totaled $ 253 million and $ 36 million , respectively, to include PP&E, inventory, accounts receivable and other assets and liabilities.

The closings in the fourth quarter of 2018 were for our land drilling rigs operations in Kuwait and Saudi Arabia.

We recognized an insignificant loss and divested a carrying amount of $ 34 million in net assets.

In the 2019 Predecessor Period, we completed the final closings in a series of closings pursuant to the purchase and sale agreements entered into with ADES International Holding Ltd.

in July of 2018 to sell our land drilling rig operations in Algeria, Kuwait and Saudi Arabia, as well as two idle land rigs in Iraq, for an aggregate purchase price of $ 288 million.

In the 2018 Predecessor Period, we received gross proceeds of $ 216 million and recognized a loss of $ 9 million after recognizing asset write-down charges of $ 58 million for deferred mobilization costs and other rigs related assets as such costs were no longer recoverable.

The carrying amount of the assets and liabilities sold in 2018 totaled $ 253 million and $ 36 million, respectively, to include PP&E, inventory, accounts receivable and other assets and liabilities.

In the 2019 Predecessor Period we received the remaining gross proceeds of $ 72 million and recognized a loss of $ 6 million.

The carrying amounts of net assets divested during the 2019 Predecessor Period was $ 66 million.

We divested several of our remaining rig assets through separate asset sale agreements throughout 2019.

In March of 2018, we completed the sale of our continuous sucker rod service business in Canada for a purchase price of $ 25 million and recognized a gain of $ 2 million .

The carrying amounts of the major classes of assets divested total $ 23 million and included PP&E of $ 14 million , allocated goodwill of $ 8 million and inventory of $ 1 million .

In the third quarter of 2018, we completed the sale of an equity investment in a joint venture for $ 12.5 million and recognized a gain of $ 3 million .

In December of 2017, we completed the sale of our U.S.

pressure pumping and pump-down perforating assets for $ 430 million in cash.

As part of this transaction, we disposed of our ownership of our U.S.

pressure pumping and pump-down perforating related facilities and supplier and customer contracts.

Proceeds from the sale were used to reduce outstanding indebtedness.

The net gain on the disposition of the U.S.

pressure pumping and pump-down assets was $ 96 million .

The carrying amount of the major classes of assets divested total $ 391 million and included PP&E of $ 222 million , allocated goodwill of $ 162 million and inventory of $ 7 million .

The carrying amounts of the major classes of liabilities divested total $ 61 million and included other liabilities of $ 52 million and long-term debt of $ 9 million .

In the 2018 Predecessor Period, we completed the sale of our continuous sucker rod service business in Canada for a purchase price of $ 25 million and recognized a gain of $ 2 million.

During 2018, we also completed the sale of an equity investment in a joint venture for $ 12.5 million and recognized a gain of $ 3 million.

See “Note 10 – Long-Lived Asset Impairments” for further details related to impairments and those specific to our land drilling rigs assets.

Weatherford International plc – 2020 Form 10-K | 72

Table of Contents Item 8 | Notes to the Consolidated Financial Statements

See “ Note 9 – Long-Lived Asset Impairments and Asset Write-Downs ” for further details related to impairments and those specific to our land drilling rigs assets.

Held for Sale

During the second quarter of 2019, we reclassified remaining land drilling rigs held for sale assets of $ 53 million to assets held for use as the time required to close the recent land drilling rigs sales indicate that we may not be able to conclude that a sale is probable to occur in an appropriate timeline.

However, we continue to pursue options to sell all of our remaining land drilling rigs operations and successfully divested several of our remaining rig assets through separate asset sale agreements throughout 2019.

At December 31, 2019 , assets qualifying as held for sale were insignificant.

At December 31, 2018, assets qualifying as held for sale totaled $ 265 million and liabilities held for sale totaled $ 17 million .

These amounts primarily consisted of our surface data logging and laboratory services business held for sale (which was completed as of April 30, 2019) and our remaining land drilling rigs operations held for sale (which the unsold portions were reclassified back to held for use).

During 2018 and 2017, there were no reclassifications from held for sale into held and used.

Property, Plant and Equipment, Net

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Property, Plant and Equipment, Net $ 1,236 $ 2,122

Depreciation expense for the Successor Period was $ 25 million and was $ 386 million during the Predecessor Period, and $ 493 million and $ 749 million for the years ended December 31, 2018 and 2017 , respectively.

Weatherford International plc – 2019 Form 10-K | 85

Table of Contents Item 8 | Notes to the Consolidated Financial Statements

Long-Lived Asset Impairments and Asset Write-Downs

We recognized long-lived asset impairments of $ 20 million for the 2019 Predecessor Period to write-down our assets to the lower of carrying amount or fair value less cost to sell for our land drilling rigs.

We had asset write-downs of $ 91 million for assets where there was low or no demand.

The long-lived asset impairments in 2019 were primarily related to our Western Hemisphere segment totaling $ 13 million and Eastern Hemisphere totaling $ 7 million .

During the second quarter of 2019, we reclassified our remaining land drilling rigs assets back into held for use.

The 2019 impairments were due to the sustained downturn in the oil and gas industry that resulted in us having to reassess our disposal groups for our land drilling rigs.

The change in our expectations of the market’s recovery, in addition to successive negative operating cash flows in certain disposal asset groups represented an indicator that those assets will no longer be recoverable over their remaining useful lives.

The Level 3 fair values of the long-lived assets were determined using a combination of the market and income approach.

The market approach considered market sales values for similar assets.

The unobservable inputs to the income approach included the assets’ estimated future cash flows and estimates of discount rates commensurate with the assets’ risks.

See “ Note 15 – Fair Value of Financial Instruments, Assets and Other Assets ” for additional information regarding the fair value determination used in the impairment calculation.

During 2018, we recognized long-lived asset impairments of $ 151 million , of which $ 141 million ( $ 43 million in our Western Hemisphere segment and $ 98 million in our Eastern Hemisphere segment) was to write-down our land drilling rigs assets to the lower of carrying amount or fair value less cost to sell and the remaining $ 10 million , of which $ 3 million was in our Western Hemisphere and $ 7 million is in our Eastern Hemisphere segment) of charges were for land drilling rigs assets charges not in held for sale.

See “ Note 7 – Business Combinations and Divestitures ” for more details.

The 2018 impairments were due to the sustained downturn in the oil and gas industry that resulted a reassessment of our disposal groups for our land drilling rigs.

See “ Note 15 – Fair Value of Financial Instruments, Assets and Other Assets ” for additional information regarding the fair value determination used in the impairment calculation.

During 2017, we recognized long-lived asset impairments of $ 928 million , of which $ 923 million was related to PP&E impairments and $ 5 million was related to the impairment of intangible assets.

The PP&E impairments in our Eastern Hemisphere segment include a $ 740 million write-down to the lower of carrying amount or fair value less cost to sell of our land drilling rigs classified as held for sale, $ 135 million related to Western Hemisphere segment product line assets and $ 37 million related to other Eastern Hemisphere segment product line assets.

In addition, we recognized $ 11 million of long-lived impairment charges related to Corporate assets.

The 2017 impairments were due to the sustained downturn in the oil and gas industry, whose recovery was not as strong as expected and whose recovery in subsequent quarters was slower than had previously been anticipated.

The change in the expectations of the market’s recovery, in addition to successive negative operating cash flows in certain asset groups represented an indicator that those assets will no longer be recoverable over their remaining useful lives.

See “ Note 15 – Fair Value of Financial Instruments, Assets and Other Assets ” for additional information regarding the fair value determination used in the impairment calculation.

Depreciation expense was $ 340 million, $ 25 million, $ 386 million, and $ 493 million for the 2020 and 2019 Successor Periods and the 2019 and 2018 Predecessor Periods, respectively.

See “Note 10 – Long-Lived Asset Impairments” for additional information on property, plant and equipment impairments.

Long-Lived Asset Impairments

The unprecedented global economic and industry conditions attributable to the COVID-19 pandemic resulting in the significant volatility in the energy industry impacting the demand for our products and services were identified as long-lived asset impairment indicators.

As a result, we performed impairment assessments quarterly in 2020 through analysis of the undiscounted cash flow of our asset groups, which include property, plant and equipment, definite-lived intangible assets, goodwill and right of use assets.

As of March 31, 2020, and as of June 30, 2020, we identified that impairment occurred in certain asset groups and with the assistance of third-party valuation advisors we determined the fair value of those asset groups.

Based on our impairment tests, we determined the carrying amount of certain long-lived asset groups exceeded their respective fair values and we recognized $ 814 million of long-lived asset impairments in “Impairments and Other Charges” on the accompanying Consolidated Statements of Operations.

The fair values of certain of our long-lived asset groups were determined using discounted cash flow or Level 3 fair value analyses.

The income approach required significant assumptions to determine the fair value of an asset or asset group including the estimated discounted future cash flows, specifically the forecasted revenue, forecasted operating margins and the discount rate.

The table below details the Successor long-lived asset impairments by asset and segment recognized for the year ended December 31, 2020.

(Dollars in millions) Western Hemisphere Eastern Hemisphere Total

Property, Plant and Equipment $ 316 $ 255 $ 571

Intangible Assets 43 112 155

Right of Use Assets 56 32 88

Total Impairment Charges $ 415 $ 399 $ 814

We recognized long-lived asset impairments of $ 20 million for the 2019 Predecessor Period to write-down our land drilling rigs in our Western Hemisphere segment totaling $ 13 million and Eastern Hemisphere totaling $ 7 million.

During 2018, we recognized long-lived asset impairments of $ 151 million ($ 46 million in our Western Hemisphere and $ 105 million in our Eastern Hemisphere segments) to write-down our land drilling rigs assets.

See “Note 8 – Business Combinations and Divestitures” and “Note 15 – Fair Value of Financial Instruments, Assets and Other Assets” for more details.

Weatherford International plc – 2020 Form 10-K | 73

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Goodwill and Intangible Assets

As a result of Fresh Start Accounting, we recognized $ 239 million of goodwill in our Middle East & North Africa (“MENA”) and Russia reporting units.

In the Predecessor Period, our goodwill impairment tests indicated that goodwill for all our reporting units in the Western Hemisphere and Eastern Hemisphere were impaired and as a result we incurred a goodwill impairment charge of $ 730 million .

In the fourth quarter of 2018, our annual and interim goodwill impairment tests indicated that our goodwill was impaired and as a result we incurred a goodwill impairment charge of $ 1.9 billion .

The cumulative impairment loss for goodwill was $ 3.4 billion for the Predecessor.

The changes in the carrying amount of goodwill by reporting segment are presented in the following table.

The impairment indicators during the 2019 Predecessor Period and December 31, 2018, included the steep decline in oil prices and expectations for lower exploration and production capital spending that resulted in a sharp reduction in share prices in the oilfield services sector.

See Goodwill Impairment Assessment Factors below for additional details.

In 2017 our annual goodwill impairment test indicated that goodwill was not impaired.

Successor Goodwill Recognition and Impairment

As a result of Fresh Start Accounting, we recognized $ 239 million of goodwill in our Middle East and North Africa (“MENA”) and Russia, Turkmenistan and Kazakhstan (“Russia”) reporting units.

During the first half of 2020 we identified the impairment indicators as discussed in “Note 10 – Long-Lived Asset Impairments” that triggered interim quantitative goodwill assessments as of March 31, 2020 and June 30, 2020.

The fair values of our reporting units were determined using a combination of the income approach and the market approach for comparable companies in our industry, a Level 3 fair value analysis.

Determining the fair value of the reporting units requires management to develop significant judgments, including estimating discounted future cash flows by reporting unit, specifically forecasted revenue, forecasted operating margins and discount rates.

We determined that the fair value of our reporting units were less than their carrying values and as a result of our impairment tests, we fully impaired our goodwill in the MENA and Russia reporting units as presented in “Impairments and Other Charges” on the accompanying Consolidated Statements of Operations.

The changes in the carrying amount of goodwill by reporting segment for the years ended December 31, 2020 and 2019, are presented in the following table.

(Dollars in millions)

Western Hemisphere

Eastern Hemisphere

Balance at December 31, 2017 (Predecessor)

Reclassification to assets held for sale

Foreign currency translation

(Dollars in millions) Western Hemisphere Eastern Hemisphere Total

Balance at December 31, 2018 (Predecessor) $ 494 $ 219 $ 713

Impairment ( 508 ) ( 222 ) ( 730 )

Reclassification from assets held for sale 4 — 4

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Balance at December 31, 2019 (Successor) $ — $ 239 $ 239

Goodwill Impairment Assessment Factors

The Predecessor impairment indicators during 2019 were a result of lower activity levels and lower exploration and production capital spending that resulted in a decline in drilling activity and forecasted growth in all our reporting units.

Our lower than expected and forecasted financial results were due to the continued weakness within the energy market and consequently our inability to meet the original timeline of our restructuring plan savings, defined in “ Note 11 – Restructuring, Facility Consolidation and Severance Charges .” These circumstances, prompted us to evaluate whether circumstances had changed that would more likely than not reduce the fair value of one or more of our reporting units below their carrying amount.

When conducting this evaluation, we considered macroeconomic and industry conditions, including the outlook for exploration and production spending by our customers and overall financial performance of each of our reporting units.

We also considered whether there were any changes in our long-term forecasts, which are impacted by assumptions about the future commodity pricing and supply and demand for our goods and services.

Impairment $ — $ ( 239 ) $ ( 239 )

Balance at December 31, 2020 (Successor) $ — $ — $ —

Predecessor Period Goodwill Impairments and Assessment Factors

The Predecessor impairment indicators during 2019 and 2018 were a result of lower activity levels and lower exploration and production capital spending that resulted in a decline in drilling activity and forecasted growth in all our reporting units.

Our lower than expected and forecasted financial results were due to the continued weakness within the energy market and consequently our inability to quickly and significantly reduce our cost structure under our restructuring plans savings.

In the 2019 Predecessor Period, our goodwill impairment tests indicated that goodwill for all our reporting units in the Western Hemisphere and Eastern Hemisphere were impaired and as a result we incurred a goodwill impairment charge of $ 730 million.

In 2018, our annual and interim goodwill impairment tests indicated that our goodwill was impaired and as a result we incurred a goodwill impairment charge of $ 1.9 billion, of which $ 1.4 billion was related to our Western Hemisphere segment and $ 537 million was related to our Eastern Hemisphere segment.

The cumulative impairment loss for goodwill was $ 239 million for the Successor and $ 3.4 billion for Predecessor periods.

Weatherford International plc – 2020 Form 10-K | 74

3 unchanged sentences

December 31, 2020

(Dollars in millions)

Carrying Accumulated Intangible

(Dollars in millions) Amount Amortization Assets

Developed and Acquired Technology $ 588 $ ( 132 ) $ 456

At December 31, 2018, our intangible assets were $ 213 million , net of amortization.

Amortization expense was $ 9 million in the Successor Period and was $ 61 million for the Predecessor Period, and $ 63 million and $ 52 million for the years ended December 31, 2018 and 2017 , respectively.

Trade Names 395 ( 41 ) 354

Totals $ 983 $ ( 173 ) $ 810

December 31, 2019

Carrying Accumulated Intangible

(Dollars in millions) Amount Amortization Assets

Developed and Acquired Technology $ 728 $ ( 7 ) $ 721

Trade Names 395 ( 2 ) 393

Totals $ 1,123 $ ( 9 ) $ 1,114

We recognized an impairment of $ 155 million of our developed and acquired technology in “Impairments and Other Charges” on the accompanying Consolidated Statements of Operations during the Successor year ended December 31, 2020.

Amortization expense was $ 163 million in the Successor year ended December 31, 2020, $ 9 million in the 2019 Successor Period, $ 61 million in the 2019 Predecessor Period and $ 63 million in the Predecessor year ended December 31, 2018.

Based on the carrying value of intangible assets at December 31, 2020, amortization expense for the subsequent five years is estimated as follows (dollars in millions):

Period Amount

Weatherford International plc – 2020 Form 10-K | 75

Table of Contents Item 8 | Notes to the Consolidated Financial Statements

Restructuring, Facility Consolidation and Severance Charges

Due to the highly competitive nature of our business and the continuing losses we incurred over the last few years, we continue to reduce our overall cost structure and workforce to better align our business with current activity levels.

Our current and historical restructuring plans include workforce reductions, organization restructurings, facility consolidations and other cost reduction measures and efficiency initiatives across all of our geographic regions.

During the 2019 Predecessor Period, we recognized restructuring charges of $ 189 million , which include severance charges of $ 53 million and other restructuring charges of $ 99 million and restructuring related asset charges of $ 37 million .

During 2018, we recognized restructuring charges of $ 126 million , which include severance charges of $ 61 million , other restructuring charges of $ 59 million and restructuring related asset charges of $ 6 million .

During 2017, we recognized restructuring charges of $ 183 million , which include severance charges of $ 109 million , other restructuring charges of $ 62 million and restructuring related asset charges of $ 12 million .

The following table presents total restructuring charges by reporting segment and Corporate for the Successor Period and the Predecessor Period in 2019 and the years ended December 31, 2018 and 2017.

Restructuring Charges

In response to the impact of our business from the COVID-19 pandemic and the significant and sudden changes in oil and gas prices, we have continued to develop and execute on plans to rationalize and restructure our business and right-size our operations and personnel.

Additional charges with respect to our ongoing cost reduction actions may be recognized in subsequent periods.

The following table presents restructuring charges for the Successor and Predecessor Periods.

Successor Predecessor

Period From Period From

Year 12/14/2019 01/01/2019 Year

Ended through through Ended

(Dollars in millions) 12/31/2020 12/31/2019 12/13/2019 12/31/2018

Severance Charges $ 132 $ — $ 53 $ 61

Facility Exit Charges 10 — 99 61

Inventory Charges 15 — 24 —

Property, Plant and Equipment 40 — 13 2

Right of Use and Other Assets 9 — — 2

Total Restructuring Charges $ 206 $ — $ 189 $ 126

The following table presents total restructuring charges by reporting segment and Corporate for the Successor and Predecessor Periods.

Successor Predecessor

Period From Period From

Year 12/14/2019 01/01/2019 Year

Ended through through Ended

(Dollars in millions) 12/31/2020 12/31/2019 12/13/2019 12/31/2018

Western Hemisphere $ 101 $ — $ 84 $ 27

Eastern Hemisphere 52 — 50 45

Corporate 53 — 55 54

Total Restructuring Charges $ 206 $ — $ 189 $ 126

The following table presents total restructuring accrual activity for the periods presented.

Restructuring charges in the table below exclude restructuring related asset charges.

(Dollars in millions) Accrued Balance at Beginning of Period Charges Cash Payments Other

Accrued Balance at End of Period

Successor Year Ended December, 31, 2020 $ 66 $ 142 $ ( 137 ) $ ( 18 ) $ 53

Successor Period - 2019 $ 66 $ — $ — $ — $ 66

Predecessor Period - 2019 $ 59 $ 152 $ ( 120 ) $ ( 25 ) $ 66

The following table presents total restructuring accrual activity charges, payments and other changes for the Successor and Predecessor Periods in 2019 and the years ended December 31, 2018 and 2017.

In the first quarter of 2019, we reclassified $ 12 million of restructuring cease-use liability to the initial ROU asset in accordance with the adoption of Topic 842.

(Dollars in millions)

Accrued Balance at Beginning of Period

Cash Payments

Accrued Balance at End of Period

Successor - 2019

Predecessor - 2019

The restructuring charges accrual in the table above excludes restructuring related asset charges of $ 37 million in the 2019 Predecessor Period, $ 6 million for the period ended December 31, 208 and $ 12 million for the period ended December 31, 2017.

Predecessor Year Ended December 31, 2018 $ 61 $ 120 $ ( 109 ) $ ( 13 ) $ 59

Weatherford International plc – 2020 Form 10-K | 76

3 unchanged sentences

we recognize lease expense for these leases on a straight-line basis over the lease term.

For adoption of Topic 842 we used the December 31, 2018 incremental borrowing rate, for operating leases that commenced prior to December 31, 2018.

We have data center lease agreements with lease and non-lease components which are accounted for separately, while for the remainder of our agreements we have elected the practical expedient to account for lease and non-lease components as a single lease component.

1 unchanged sentence

Operating lease payments include related options to extend or terminate lease terms that are reasonably certain of being exercised.

The unmanned equipment that we lease to customers as operating leases consists primarily of drilling rental tools and artificial lift pumping equipment.

The unmanned equipment that we lease to customers under operating leases consists primarily of drilling rental tools and artificial lift pumping equipment.

These equipment rental revenues are generally provided based on call-out work orders that include fixed per unit prices and are derived from short-term contracts.

See “Note 1 – Summary of Significant Accounting Policies” and “Note 23 – Revenues” for additional details on our equipment rental revenues.

(Dollars in millions)

Classification

December 31, 2019

Balance Sheet Components:

Other Non-Current Assets

Property Plant and Equipment, Net

Total leased assets

Other Current Liabilities

Short-term Borrowings and Current Portion of Long-term Debt

Other Non-Current Liabilities

Long-term Debt

Total lease liabilities

Successor Predecessor

Period From Period From

Year 12/14/2019 1/1/2019

Ended through through

(Dollars in millions) 12/31/2020 12/31/2019 12/13/2019

2 unchanged sentences

Short-term and Variable Lease Expense 63 5 91

Subtotal of Operating Lease Expense $ 139 $ 10 $ 200

Finance Lease Expense:

2 unchanged sentences

Total Lease Expense $ 148 $ 10 $ 205

Weatherford International plc – 2019 Form 10-K | 90

Table of Contents Item 8 | Notes to the Consolidated Financial Statements

In 2019 total expense incurred under operating leases was $ 10 million in the Successor Period and $ 200 million in the Predecessor Period, and $ 187 million and $ 217 million for the years ended December 31, 2018 and December 31, 2017 , respectively.

Lease expense incurred under operating leases was $ 187 million for the Predecessor year ended December 31, 2018.

We are committed under various operating lease agreements primarily related to office space and equipment.

1 unchanged sentence

Future minimum commitments under operating and finance leases are as follows:

(Dollars in millions)

Operating Finance

(Dollars in millions) Leases Leases

Maturity of Lease Liabilities as of December 31, 2020:

2021 $ 91 $ 14

After 2025 131 14

Total Lease Payments 380 74

Interest 132 17

Present Value of Lease Liabilities $ 248 $ 57

Weatherford International plc – 2020 Form 10-K | 77

Table of Contents Item 8 | Notes to the Consolidated Financial Statements

Successor Predecessor

Period From Period From

12/14/2019 1/1/2019

Year Ended through through

(Dollars in millions except years and percentages) 12/31/2020 12/31/2019 12/13/2019

7 unchanged sentences

Loss on sale leaseback transactions (short-term) (a)

December 31, 2019

December 31, 2020 December 31, 2019

Weighted-average remaining lease term (years)

4 unchanged sentences

Finance leases 9.1 % 9.1 %

(a) Included in “ Long-Lived Asset Impairments, Write-Downs and Other ” in our Condensed Consolidated Statements of Operations and “ Other, Net ” in our Condensed Consolidated Statements of Cash Flows .

Weatherford International plc – 2019 Form 10-K | 91

Table of Contents Item 8 | Notes to the Consolidated Financial Statements

Short-term Borrowings and Other Debt Obligations

(Dollars in millions)

364-Day Credit Agreement (repaid in full July 3, 2019)

A&R Credit Agreement (repaid in full December 13, 2019)

ABL Credit Agreement (issued December 13, 2019)

Other Short-term Loans

Current Portion of Long-term Debt

Short-term Borrowings and Current Portion of Long-term Debt

Exit Credit Agreements (Effective Date)

ABL Credit Agreement

On the Effective Date pursuant to the terms of the Plan, the Company entered into a senior secured asset-based revolving credit agreement in an aggregate amount of $ 450 million (the “ABL Credit Agreement ” ) with the lenders party thereto and Wells Fargo Bank, N.A.

as administrative agent.

Among other things, proceeds of loans under the ABL Credit Agreement may be used to refinance certain existing indebtedness in connection with the Cases, and finance ongoing working capital and general corporate needs of the Company and certain of its subsidiaries.

The maturity date of loans made under the ABL Credit Agreement is June 13, 2024.

At December 31, 2019, the Company did no t have any borrowings under the ABL Credit Agreement.

Revolving Loans as defined in and under the ABL Credit Agreement will bear interest at a rate of (i) in the case of LIBOR rate borrowings, the LIBOR rate plus an applicable margin in the range of 175-225 basis points per annum, with a zero LIBOR rate floor, and (ii) in the case of base rate borrowings, the base rate plus an applicable margin in the range of 75-125 basis points per annum, in the case of clauses (i) and (ii), based on the Average Excess Availability (as defined in the ABL Credit Agreement).

The FILO Loans (as defined in the ABL Credit Agreement) under the ABL Credit Agreement will bear interest at a rate of (i) in the case of LIBOR rate borrowings, the LIBOR rate plus an applicable margin of 350 basis points per annum, with a zero LIBOR rate floor, and (ii) in the case of base rate borrowings, the base rate plus an applicable margin of 250 basis points per annum.

In addition to paying interest on outstanding principal amounts under the ABL Credit Agreement, the Company will be required to pay (A) a letter of credit fee for each letter of credit issued thereunder equal to (i) in the case of those allocated to the Revolver Commitments (as defined in the ABL Credit Agreement), 175-225 basis points per annum based on the Average Excess Availability, and (ii) in the case of those allocated to the FILO Commitments (as defined in the ABL Credit Agreement), 350 basis points per annum, in each case, on the amount of each such letter of credit, and (b) a 12.5 basis point per annum fronting fee on the amount of each such letter of credit, and (B) an unused commitment fee in respect of the average unutilized Revolver Commitments and the average unutilized FILO Commitments at a rate of either 37.5 or 50 basis point per annum, based on the level of the Average Facility Usage (as defined in the ABL Credit Agreement).

The ABL Credit Agreement has a financial covenant that applies only after the occurrence of a Covenant Trigger Event (as defined in the ABL Credit Agreement) and requires, during any Covenant Testing Period (as defined in the ABL Credit Agreement), at least a 1.00 to 1.00 ratio of (a) Consolidated Adjusted EBITDA (as defined in the ABL Credit Agreement) minus Unfinanced Capital Expenditures (as defined in the ABL Credit Agreement) to (b) Fixed Charges (as defined in the ABL Credit Agreement).

The ABL Credit Agreement is secured by substantially all of the personal assets and properties of the Company and certain of its subsidiaries (including a first lien on the priority collateral for the ABL Credit Agreement and a second lien on the priority collateral for the LC Credit Agreement (as defined below), in each case, subject to permitted liens).

The ABL Credit Agreement is also guaranteed on an unsecured basis by certain other subsidiaries of the Company.

LC Credit Agreement

On December 13, 2019, pursuant to the terms of the Plan, the Company entered into a senior secured letter of credit credit agreement in an aggregate amount of $ 195 million (the “LC Credit Agreement”, together with the ABL Credit Agreement, the “Exit Credit Agreements”) with the lenders party thereto and Deutsche Bank Trust Company Americas as administrative agent.

The LC Credit Agreement will be used for the issuance of bid and performance letters of credit of the Company and certain of its subsidiaries.

The maturity date under the LC Credit Agreement is June 13, 2024.

The outstanding amount of each letter of credit

Weatherford International plc – 2019 Form 10-K | 92

Table of Contents Item 8 | Notes to the Consolidated Financial Statements

under the LC Credit Agreement will bear interest at LIBOR plus an applicable margin of 350 basis points per annum.

The LC Credit Agreement includes (i) a 12.5 basis point per annum fronting fee on the outstanding amount of each such letter of credit and (ii) an unused commitment fee in respect of the unutilized commitments at a rate of 50 basis point per annum on the average daily unused commitments under the LC Credit Agreement.

Upon the Effective Date, the Company had approximately $ 65.8 million in outstanding letters of credit under the LC Credit Agreement.

The LC Credit Agreement has a minimum liquidity covenant of $ 200 million and is secured by substantially all the personal assets and properties of the Company and certain of its subsidiaries (including a first lien on the priority collateral for the LC Credit Agreement and a second lien on the priority collateral for the ABL Credit Agreement, in each case, subject to permitted liens).

The LC Credit Agreement is also guaranteed on an unsecured basis by certain other subsidiaries of the Company.

As of December 31, 2019 , we were in compliance with these financial covenants as defined in the Exit Credit Agreements and in the covenants under our indentures.

DIP Credit Agreements Overview

On July 3, 2019, the Weatherford Parties borrowed approximately $ 1.4 billion under the DIP Credit Agreement and the proceeds were used to repay certain prepetition indebtedness, cash collateralize certain obligations with respect to letters of credit and similar instruments and financed the working capital needs and general corporate purposes of the Weatherford Parties and certain of their subsidiaries.

The DIP Credit Agreement was comprised of the DIP Term Loan and the DIP Revolving Credit Facility.

On July 3, 2019, the Company repaid all outstanding amounts due under the secured Term Loan Agreement and 364-Day Credit Agreement totaling approximately $ 616 million with borrowings from our DIP Credit Agreement, leaving only the A&R Credit Agreement with total borrowings of $ 305 million outstanding at December 13, 2019 that was repaid in full upon emergence date from Bankruptcy on the Effective Date under the terms of the RSA.

In addition, we cash collateralized approximately $ 271 million of letters of credit and similar instruments with borrowings from the DIP Credit Agreement.

See “ Note 2 – Emergence from Chapter 11 Bankruptcy Proceedings ” and “ Note 3 – Fresh Start Accounting ” for additional details regarding interest rates and terms of the DIP Credit Agreement.

Prior Credit Agreements (364-Day, A&R, and Term Loan)

At December 31, 2018, we had two revolving credit agreements with total commitments of $ 846 million , comprised of an unsecured senior revolving credit agreement (the “A&R Credit Agreement”) in the amount of $ 529 million , and a Secured Second Lien 364-Day Revolving Credit Agreement (the “364-Day Credit Agreement” and, together with the A&R Credit Agreement, the “Revolving Credit Agreements”) in the amount of $ 317 million .

At December 31, 2018, we had principal borrowings of $ 310 million under the Term Loan Agreement.

We collectively refer to our Revolving Credit Agreements and Term Loan Agreement as the “Prior Credit Agreements.”

Under the terms of the A&R Credit Agreement, commitments of $ 226 million from non-extending lenders (“non-extending lenders”) matured on July 12, 2019 and commitments of $ 303 million from extending lenders (“extending lenders”) would mature on July 13, 2020.The 364-Day Credit Agreement matured on August 15, 2019.

On July 3, 2019, the Company repaid in full its outstanding indebtedness under the 364-Day Credit Agreement.

The A&R Credit Agreement was repaid in full upon emergence from Bankruptcy on December 13, 2019 under the terms of the RSA.

The Term Loan Agreement required a quarterly payment of $ 12.5 million plus interest that became due on June 30, 2019.

On July 1, 2019, the Weatherford Parties and the Term Loan Lenders entered into a Term Loan Forbearance Agreement where the lenders agreed to forbear from exercising their rights and remedies available to them, including the right to accelerate any indebtedness, for a specified period of time.

On July 3, 2019, the Company repaid in full its outstanding indebtedness under the Term Loan.

On July 3, 2019, the Weatherford Parties borrowed approximately $ 1.4 billion under the DIP Credit Agreement, comprised of the DIP Term Loan and the DIP Revolving Credit Facility, and the proceeds of the borrowings were used to repay certain prepetition indebtedness, cash collateralize certain obligations with respect to letters of credit and similar instruments and financed the working capital needs and general corporate purposes of the Weatherford Parties and certain of their subsidiaries.

The borrowings were used to repay in full the outstanding amounts due under the secured Term Loan Agreement and 364-Day Credit Agreement totaling approximately $ 616 million on July 3, 2019.

The DIP Credit Agreement was repaid in full upon emergence from Bankruptcy on December 13, 2019.

Loans under the Prior Credit Agreements were subject to varying rates of interest based on whether the loan was a Eurodollar loan or an alternate base rate loan.

We also incurred a quarterly facility fee on the amount of the A&R Credit Agreement.

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Table of Contents Item 8 | Notes to the Consolidated Financial Statements

year ended December 31, 2019 and through the time the outstanding balances were each paid in full, the interest rate for the A&R Credit Agreement was LIBOR plus a margin rate of 3.55 % for extending lenders and LIBOR plus a margin rate of 2.80 % for non-extending lenders and the interest rate for borrowings under the Term Loan Agreement and 364-Day Credit Agreement was LIBOR plus a margin rate of 2.30 % and LIBOR plus a margin rate of 3.05 % , respectively.

Note after the Petition Date, the interest rate for the A&R Credit Agreement was LIBOR plus default interest of 2.0% in addition to a margin rate of 3.55 % for extending lenders and a margin rate of 2.80 % for non-extending lenders;

the interest rate for alternate base rate borrowings under the A&R Credit Agreement, was alternate base rate plus default interest of 2.0% in addition to a margin rate of 2.55% for extending lenders and a margin rate of 1.80% for non-extending lenders.

Prior to the repayment of the borrowings of the Term Loan and 364-Day Credit Agreement on July 3, 2019, the interest rate for borrowings under our Term Loan Agreement and 364-Day Credit Agreement were LIBOR plus a margin rate of 2.30 % and LIBOR plus a margin rate of 3.05 % , respectively.

Other Short-Term Borrowings and Debt Activity

In February 2018, we repaid in full our 6.00 % senior notes due March 2018.

In June 2017, we repaid in full our 6.35 % senior notes on the maturity date.

We have short-term borrowings with various domestic and international institutions pursuant to uncommitted credit facilities and other financing arrangements.

At December 31, 2019 , we had $ 3 million in short-term borrowings under these arrangements.

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 .

At December 31, 2019 and December 31, 2018, the current portion of long-term debt was primarily related to the short-term portion of our financed leases and the current portion of our Term Loan Agreement of $ 50 million , respectively.

(a) Included in “Impairments and Other Charges” in our Consolidated Statements of Operations and “Other Assets and Liabilities, Net” in our Consolidated Statements of Cash Flows.

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Table of Contents Item 8 | Notes to the Consolidated Financial Statements

Long-term Debt

Our long-term debt carrying value consisted of the following:

Borrowings and Other Debt Obligations

Total debt carrying values consisted of the following:

(Dollars in millions) 2020 2019

Finance Lease Current Portion $ 9 $ 10

Other Short-term Financing Arrangements 4 3

Short-term Borrowings $ 13 $ 13

11.00 % Exit Notes due 2024

5.125% Senior Notes due 2020

5.875% Exchangeable Senior Notes due 2021

7.75% Senior Notes due 2021

4.50% Senior Notes due 2022

8.25% Senior Notes due 2023

9.875% Senior Notes due 2024

9.875% Senior Notes due 2025

6.50% Senior Notes due 2036

6.80% Senior Notes due 2037

7.00% Senior Notes due 2038

9.875% Senior Notes due 2039

6.75% Senior Notes due 2040

5.95% Senior Notes due 2042

Term Loan Agreement due 2020

Finance and Other Lease Obligations

Total Senior Notes and Other Debt

Amounts Due in One Year

$ 2,098 $ 2,097

8.75 % Senior Secured Notes due 2024

Finance Lease Long-term Portion 48 $ 54

Long-term Debt $ 2,601 $ 2,151

The accrued interest on our borrowings was $ 12 million and $ 140 million at December 31, 2019 and 2018 , respectively.

The following is a summary of scheduled long-term debt maturities by year (dollars in millions):

Successor Exit Notes

On the Effective Date pursuant to the terms of the Plan, we issued unsecured 11.00 % Exit Notes due in 2024 for an aggregate principal amount of $ 2.1 billion (of which $ 500 million was in the form of Exit Takeback Notes to existing creditors on the senior notes being cancelled).

Interest on the Exit Notes will accrue at the rate of 11.00 % per annum and will be payable semiannually in arrears on June 1 and December 1, commencing on June 1, 2020.

On December 13, 2019, we issued unsecured 11.00 % Exit Notes due in 2024 for an aggregate principal amount of $ 2.1 billion (of which $ 500 million was in the form of Exit Takeback Notes to existing creditors on the senior notes being cancelled).

Interest on the Exit Notes accrues at the rate of 11.00 % per annum and is payable semiannually in arrears on June 1 and December 1.

We commenced interest payments thereunder on June 1, 2020.

At any time prior to December 1, 2021, the Company may redeem the Exit Notes, in whole or in part, at a redemption price equal to the sum of (i) the principal amount thereof, plus (ii) the “make-whole” premium at the redemption date, plus (iii) accrued and unpaid interest, if any, to the redemption date (subject to the right of the noteholders of record on the relevant record date to receive interest due on an interest payment date that is on or prior to the redemption date).

On and after December 1, 2021, the Company may redeem all or part of the 11.00 % Exit Notes at redemption prices (expressed as percentages of the principal amount)

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Table of Contents Item 8 | Notes to the Consolidated Financial Statements

equal to (i) 105.500 % for the twelve-month period beginning on December 1, 2021;

On and after December 1, 2021, the Company may redeem all or part of the 11.00 % Exit Notes at redemption prices (expressed as percentages of the principal amount) equal to (i) 105.5 % for the twelve-month period beginning on December 1, 2021;

(ii) 102.75 % for the twelve-month period beginning on December 1, 2022;

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The Exit Notes are guaranteed on a senior basis by the Company’s existing domestic subsidiaries and certain foreign subsidiaries that guarantee its obligations under the Exit Credit Agreements on a full and unconditional basis.

The Indenture governing the Exit Notes contains covenants that limit, among other things, the Company’s ability and the ability of certain of its subsidiaries, to:

Senior Secured Notes

On August 28, 2020, Weatherford International Ltd., as issuer, Weatherford International plc and Weatherford International, LLC, as guarantors, and the other subsidiary guarantors party thereto, entered into an indenture with Wilmington Trust, National Association, as trustee and collateral agent, and issued the Senior Secured Notes in an aggregate principal amount of $ 500 million.

Interest on the Senior Secured Notes accrues at the rate of 8.75 % per annum and is payable semiannually in arrears on March 1 and September 1, commencing on March 1, 2021.

Proceeds from the issuance were reduced by a purchase commitment discount of $ 25 million and a commitment fee of $ 15 million.

These debt issuance costs along with legal and other direct costs are presented as a contra-liability of the carrying amount of the debt liability and will be recognized using the effective interest rate method over the term of the debt in “Interest Expense, Net” on our Consolidated Financial Statements.

The Senior Secured Notes are fully and unconditionally guaranteed on a senior secured basis by the Company’s material

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Table of Contents Item 8 | Notes to the Consolidated Financial Statements

domestic subsidiaries, certain material foreign subsidiaries, and in the future by other subsidiaries that guarantee its obligations under the LC Credit Agreement or other material indebtedness.

The Senior Secured Notes are secured by substantially all of the assets of the Company and the guarantors (on an effectively first-priority basis with respect to the priority collateral for the Senior Secured Notes, and on an effectively second-priority basis with respect to the priority collateral for the LC Credit Agreement, in each case, subject to permitted liens).

LC Credit Agreement

On December 13, 2019, pursuant to the terms of the Plan, we entered into the LC Credit Agreement in an aggregate amount of $ 195 million maturing on June 13, 2024 with the lenders party thereto and Deutsche Bank Trust Company Americas as administrative agent.

The LC Credit Agreement is used for the issuance of bid and performance letters of credit of the Company and certain of its subsidiaries.

On August 28, 2020, we amended the LC Credit Agreement to, among other things, increase the aggregate commitments to $ 215 million, modify the maturity date to May 29, 2024 and reduce the minimum liquidity covenant from $ 200 million to $ 175 million.

At December 31, 2020, we had approximately $ 167 million in outstanding letters of credit under the LC Credit Agreement and availability of $ 48 million.

Our unamortized issuance costs at December 31, 2020 was $ 12 million and is recognized over the term of the agreement in “Other Expense, Net” on our Consolidated Financial Statements.

As of December 31, 2020, we had $ 338 million of letters of credit outstanding, consisting of the $ 167 million mentioned above under the LC Credit Agreement and another $ 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).

The outstanding amount of each letter of credit under the LC Credit Agreement bears interest at LIBOR plus an applicable margin of 350 basis points per annum.

The LC Credit Agreement is secured by substantially all the personal assets and properties of the Company and certain of its subsidiaries (including a first lien on the priority collateral for the LC Credit Agreement and a second lien on the priority collateral for Senior Secured Notes, in each case, subject to permitted liens).

The LC Credit Agreement is also guaranteed on an unsecured basis by certain other subsidiaries of the Company.

ABL Credit Agreement

On the Effective Date pursuant to the terms of the Plan, the Company entered into the ABL credit agreement in an aggregate amount of $ 450 million with the lenders party thereto and Wells Fargo Bank, N.A.

as administrative agent.

On August 28, 2020, we issued $ 500 million of 8.75 % Senior Secured Notes due 2024 (“Senior Secured Notes”) and terminated the ABL Credit Agreement.

At the time of termination, there were no loan amounts outstanding under the ABL Credit Agreement, and all outstanding letters of credit thereunder were either cash collateralized or transferred to issuing banks under the LC Credit Agreement, described above.

Upon termination of the ABL Credit Agreement, we recorded $ 15 million of unamortized deferred debt issuance costs in “Interest Expense, Net” on our Consolidated Financial Statements.

At December 31, 2019, the Company did no t have any borrowings under the ABL Credit Agreement.

Covenants for the Exit and Senior Secured Notes and LC Credit Agreement

The indentures governing the Exit Notes and Senior Secured Notes contain covenants that limit, among other things, our ability and the ability of certain of our subsidiaries, to:

incur, assume or guarantee additional indebtedness;

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make investments;

sell stock of its subsidiaries;

sell stock of our subsidiaries;

transfer or sell assets;

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and enter into mergers or consolidations.

The Company is subject to a $ 175 million minimum liquidity covenant under our amended LC Credit Agreement and Senior Secured notes and, as defined in the applicable documents, Weatherford had available liquidity of $ 928 million as of December 31, 2020.

Under our amended LC Credit Agreement, the Company is also subject to a minimum secured liquidity (or cash in controlled accounts) covenant of $ 125 million.

Our secured liquidity was $ 779 million at December 31, 2020.

As of December 31, 2020, we were in compliance with the covenants of the indentures governing the Exit Notes and Senior Secured Notes and the LC Credit Agreement.

At such time as (1) the Exit Notes have an investment grade rating from both of Moody’s Investors Service, Inc.

and Standard and Poor’s Ratings Services and (2) no default has occurred and is continuing under the Indenture, certain of these and other covenants will be suspended and cease to be in effect so long as the rating assigned by either Moody’s or S&P has not subsequently declined to below Baa3 or BBB- (or equivalent).

The Indenture also provides for certain customary events of default, including, among others, nonpayment of principal or interest, failure to pay final judgments in excess of a specified threshold, failure of a guarantee to remain in effect, bankruptcy and insolvency events, and cross acceleration, which would permit the principal, premium, if any, interest and other monetary obligations on all the then outstanding Exit Notes to be declared due and payable immediately.

Term Loan Agreement

The Term Loan Agreement was due in 2020 and comprised $ 50 million of the current portion of long-term debt as of December 31, 2018.

On July 3, 2019, the Company repaid in full its outstanding indebtedness under the Term Loan.

See Note 13 – Short-term Borrowings and Other Debt Obligations for additional information.

and Standard and Poor’s Ratings Services and (2) no default has occurred and is continuing under the Indenture, certain of these and

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Table of Contents Item 8 | Notes to the Consolidated Financial Statements

Predecessor Senior Notes, Exchangeable Senior Notes and Tender Offers

Prior to the Petition Date, we issued various senior notes, all of which rank equally with our existing and future senior unsecured indebtedness, which have semi-annual interest payments and no sinking fund requirements.

As of the Petition Date, the Predecessor’s senior notes and exchangeable senior notes and related unpaid accrued interest totaling $ 7.6 billion were placed into liabilities subject to compromise during the bankruptcy period.

The related unamortized debt issuance and debt discounts were expensed to “Reorganization Items” on the Consolidated Statements of Operations.

See “ Note 2 – Emergence from Chapter 11 Bankruptcy Proceedings ” for details regarding reorganization items and liabilities subject to compromise.

Upon emergence from bankruptcy on December 13, 2019, the Predecessor’s senior and exchangeable senior notes were cancelled pursuant to the terms of the Plan, resulting in a gain on extinguishment of debt of $ 4.3 billion recorded in “Reorganization Items” on the Consolidated Statements of Operations.

Predecessor Exchangeable Senior Notes

On June 7, 2016, we issued exchangeable notes with a par value of $ 1.265 billion and an interest rate of 5.875 % .

The notes have a conversion price of $ 7.74 per share and are exchangeable into a total of 163.4 million shares of the Company upon the occurrence of certain events on or after January 1, 2021.

The notes mature on July 1, 2021.

We have the choice to settle an exchange of the notes in any combination of cash or shares.

Before the Petition date, the exchange feature was reported with a carrying amount of $ 97 million in “ Capital in Excess of Par Value ” on the accompanying Consolidated Balance Sheets.

Upon emergence from bankruptcy on December 13, 2019, the exchangeable senior notes were cancelled pursuant to the terms of the Plan, resulting in a gain recorded at face value in “Reorganization Items” on the Consolidated Statement of Operations.

In 2019 (through the Petition Date), full year 2018 and 2017, interest expense related to accrued interest and amortization of the discount on the notes was $ 50 million , $ 99 million and $ 97 million , respectively.

Predecessor Senior Notes

Upon the Effective Date, the notes were cancelled pursuant to the terms of the Plan, resulting in a gain recorded at face value included in “Reorganization Items” on the Consolidated Statement of Operations.

In February 2018, we repaid in full our 6.00 % senior notes due March 2018.

On February 28, 2018, we issued $ 600 million in aggregate principal amount of our 9.875 % senior notes due 2025.

In June 2017, we repaid in full our 6.35 % senior notes on the maturity date.

On June 26, 2017, we issued an additional $ 250 million aggregate principal amount of our 9.875 % senior notes due 2024.

These notes were issued as additional securities under an indenture pursuant to which we previously issued $ 540 million aggregate principal amount of our 9.875 % senior notes due 2024.

other covenants will be suspended and cease to be in effect so long as the rating assigned by either Moody’s or S&P has not subsequently declined to below Baa3 or BBB- (or equivalent).

The Indentures also provides for certain customary events of default, including, among others, nonpayment of principal or interest, failure to pay final judgments in excess of a specified threshold, failure of a guarantee to remain in effect, bankruptcy and insolvency events, and cross acceleration, which would permit the principal, premium, if any, interest and other monetary obligations on all the then outstanding Senior Secured Notes and Exit Notes to be declared due and payable immediately.

The following is a summary of scheduled debt maturities by year:

(Dollars in millions)

Thereafter 16

Total Debt Maturities $ 2,661

Unamortized Debt Issuance and Discount $ ( 47 )

Total Debt Carrying Value $ 2,614

Predecessor Debt

Prior Credit Agreements

During our bankruptcy proceedings, we had an unsecured senior revolving credit agreement (the “A&R Credit Agreement”), a Secured Second Lien 364-Day Revolving Credit Agreement (the “364-Day Credit Agreement”) and a Term Loan Agreement, collectively referred to as the “Prior Credit Agreements.” See “Note 2 – Emergence from Chapter 11 Bankruptcy Proceedings” and “Note 3 – Fresh Start Accounting” for further details.

Predecessor Senior and Exchangeable Senior Notes

Prior to the Petition Date, we issued various senior notes and an exchangeable senior note, all of which ranked equally with our existing and future senior unsecured indebtedness, which had semi-annual interest payments and no sinking fund requirements.

See “Note 2 – Emergence from Chapter 11 Bankruptcy Proceedings” and “Note 3 – Fresh Start Accounting” for further details.

Predecessor Tender Offers

The February 2018 debt offering partially funded a concurrent tender offer to purchase for cash any and all of our 9.625 % senior notes due 2019.

Our February 2018 debt offering partially funded a concurrent tender offer to purchase for cash any and all of our 9.625 % senior notes due 2019.

We settled the tender offer in cash for the amount of $ 475 million, retiring an aggregate face value of $ 425 million and accrued interest of $ 20 million.

In April 2018, we repaid the remaining principal outstanding on an early redemption of the bond.

We recognized a cumulative loss of $ 34 million on these transactions in “ Bond Tender and Call Premium ” on the accompanying Consolidated Statements of Operations.

We recognized a cumulative bond tender loss of $ 34 million on these transactions in “Other Expense, Net” on the accompanying Consolidated Statements of Operations.

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Classification of a financial asset or liability within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement.

Other than the derivative instruments discussed in “ Note 16 – Derivative Instruments ” and held for sale assets and liabilities described in “ Note 1 – Summary of Significant Accounting Policies ” and “ Note 7 – Business Combinations and Divestitures ,” we had no other material assets or liabilities measured and recognized at fair value on a recurring basis at December 31, 2019 and 2018 .

Other than the derivative instruments discussed in “Note 16 – Derivative Instruments” we had no other material assets or liabilities measured and recognized at fair value on a recurring basis at December 31, 2020 and December 31, 2019.

Fair Value of Other Financial Instruments

Our other financial instruments include cash and cash equivalents, accounts receivable, accounts payable, held-to-maturity investments, short-term borrowings and long-term debt.

Our other financial instruments include cash and cash equivalents, accounts receivable, accounts payable, short-term borrowings and long-term debt.

The carrying value of our cash and cash equivalents, accounts receivable, accounts payable, and short-term borrowings approximates their fair value due to their short maturities.

These short-term borrowings are classified as Level 2 in the fair value hierarchy.

During 2017, we purchased $ 50 million of held-to-maturity Angolan government bonds maturing in 2020.

The carrying value of $ 50 million in both periods approximate their fair value as of December 31, 2019 and 2018.

We assess whether an other-than-temporary impairment loss on the investment has occurred due to a decline in fair value or other market conditions.

If the fair value of the security is below amortized cost and it is more likely than not that we will not be able to recover its amortized cost basis before its stated maturity, we will record an other-than-temporary impairment charge in the Consolidated Statements of Operations.

As of December 31, 2019 we held $ 50 million of held-to-maturity Angolan government bonds which matured in 2020 and we collected the proceeds.

The fair value of our long-term debt fluctuates with changes in applicable interest rates among other factors.

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The fair value and carrying value of our senior notes were as follows:

December 31, December 31,

(Dollars in millions) 2020 2019

Carrying Value

11.00% Exit Notes due 2024 $ 1,628 $ 2,252

8.75% Senior Secured Notes due 2024 507 —

Total Fair Value of Senior Notes $ 2,135 $ 2,252

Carrying Value of Senior Notes $ 2,553 $ 2,097

Non-recurring Fair Value Measurements

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See further discussion at Note 3 – Fresh Start Accounting.

In the 2019 Predecessor Period, our goodwill impairment tests indicated that our goodwill was impaired and as a result all of our reporting units were written down to their estimated fair value.

The Level 3 fair values of our reporting units were determined using a combination of the income and market approach.

The unobservable inputs to the income approach included each reporting unit’s estimated future cash flows and estimates of discount rates commensurate with the reporting unit’s risks.

In the 2020 Successor Period and the 2019 Predecessor Period, our goodwill impairment tests indicated that our goodwill was impaired and as a result was written down to estimated fair value.

The Level 3 fair values of our reporting units were determined using a combination of the income approach and the market approach.

The unobservable inputs to the income approach requiring significant assumptions include each reporting unit’s estimated discounted future cash flows, specifically the forecasted revenue, forecasted operating margins, and the discount rate.

The market approach considered market multiples of comparable publicly traded companies to estimate fair value as a multiple of each reporting unit’s actual and forecasted earnings.

See further discussion at “ Note 10 – Goodwill and Intangible Assets .”

During the 2020 Successor Period, we recognized long-lived asset impairments to write-down our assets or asset groups to the lower of carrying amount or fair value less cost to sell, triggered by the current and forecasted impacts of the COVID-19

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Table of Contents Item 8 | Notes to the Consolidated Financial Statements

During the 2019 Predecessor Period, we recognized long-lived asset impairments to write-down our assets to the lower of carrying amount or fair value less cost to sell for our land drilling rigs.

pandemic on our operations.

The Level 3 fair values of the long-lived assets or asset groups were determined using a combination of the income approach and the market approach.

The unobservable inputs to the income approach requiring significant assumptions include each asset groups estimated discounted future cash flows, specifically the forecasted revenue, forecasted operating margins, and the discount rate.

During the 2019 Predecessor Period, we recognized long-lived asset impairments to write-down our assets to the lower of carrying amount or fair value less cost to sell.

The Level 3 fair values of the long-lived assets were determined using a combination of the market and income approach.

See further discussion at “ Note 9 – Long-Lived Asset Impairments and Asset Write-Downs .”

In the fourth quarter of 2018, our annual and interim goodwill impairment tests indicated that our goodwill was impaired and as a result three of our reporting units were written down to their estimated fair values.

The Level 3 fair values of our reporting units were determined using a combination of the income and market approach.

The unobservable inputs to the income approach included the reporting unit’s estimated future cash flows and estimates of discount rates commensurate with the reporting unit’s risks.

The Level 3 fair values of the long-lived assets were determined using a combination of the income approach and the market approach.

In 2018, our annual and interim goodwill impairment tests indicated that our goodwill was impaired and as a result three of our reporting units were written down to their estimated fair values.

The Level 3 fair values of our reporting units were determined using a combination of the income approach and the market approach.

The market approach considered market multiples of comparable publicly traded companies to estimate fair value as a multiple of each reporting unit’s actual and forecasted earnings.

During 2018, long-lived assets were impaired and written down to their estimated fair values due to the sustained downturn in the oil and gas industry that resulted in a reassessment of our disposal groups for our land drilling rigs that were included in assets held for sale at December 31, 2018 and 2017.

The Level 3 fair values of the long-lived assets were determined using a combination of the market and income approach.

The Level 3 fair values of the long-lived assets were determined using a combination of the income approach and the market approach.

The market approach considered market sales values for similar assets.

The unobservable inputs to the income approach included the assets’ estimated future cash flows and estimates of discount rates commensurate with the assets’ risks.

During the fourth quarter of 2017, long-lived assets were impaired and written down to their estimated fair values.

The Level 3 fair values of the assets were determined using an income approach.

The unobservable inputs to the income approach included the assets’ estimated future cash flows and estimates of discount rates commensurate with the assets’ risks.

See further discussion at “Note 4 – Impairments and Other Charges,” “Note 10 – Long-Lived Asset Impairments”, and “Note 11 – Goodwill and Intangible Assets.”

Derivative Instruments

Fro m time to time, we may enter into derivative financial instrument transactions to manage or reduce our market risk.

We manage our debt portfolio to achieve an overall desired position of fixed and floating rates, and we may employ interest rate swaps as a tool to achieve that goal.

We manage our debt portfolio to achieve an overall desired position of fixed and floating rates.

We enter into foreign currency forward contracts and cross-currency swap contracts to economically hedge our exposure to fluctuations in various foreign currencies.

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The fair values of all our outstanding derivative instruments are determined using a model with Level 2 inputs including quoted market prices for contracts with similar terms and maturity dates.

Warrants – Successor

On the Effective Date, pursuant to the terms of the Plan, the Company issued warrants (“New Warrants”) to holders of the Company’s Old Ordinary Shares, to purchase up to an aggregate of 7,777,779 New Ordinary Shares in the Company.

For details on the New Warrants see “ Note 20 – Shareholders’ Equity (Deficiency) ”.

Warrants – Predecessor

During the fourth quarter of 2016, in conjunction with the issuance of 84.5 million ordinary shares, we issued a warrant (“Old Warrant”) that gave the holder the option to acquire an additional 84.5 million ordinary shares.

During the fourth quarter of 2016, in conjunction with the issuance of 84.5 million ordinary shares, we issued one warrant (“Old Warrant”) that gave the holder the option to acquire an additional 84.5 million ordinary shares.

The exercise price on the Old Warrant was $ 6.43 per share and was exercisable prior to May 21, 2019.

The option period lapsed and the warrants expired unexercised with a fair value of zero.

The Old Warrant was classified as a liability and carried at fair value on the Consolidated Balance Sheets and changes in the fair value were reported through earnings.

The Old Warrant was carried at fair value on the Consolidated Balance Sheets and changes in the fair value were reported through earnings.

The Old Warrant fair value was a Level 2 valuation and was estimated using the Black Scholes valuation model.

Inputs to the model included Weatherford’s share price, volatility of our share price, and the risk-free interest rate.

The fair value of the Old Warrant was nil at December 31, 2018 .

We recognized an insignificant gain in May 2019 related to the Old Warrant expiration.

We recognized a gain of $ 70 million and $ 86 million in 2018 and 2017, respectively, with changes in fair value of the Old Warrant recorded each period in “ Warrant Fair Value Adjustment ” on the accompanying Consolidated Statements of Operations .

The change in fair value of the Old Warrant during 2018 was primarily driven by eliminating the warrant share value associated with any future

In 2018, we recognized a gain of $ 70 million with changes in fair value of the Old Warrant recorded each period in “Other Expense, Net” on the accompanying Consolidated Statements of Operations.

The change in fair value of the Old Warrant during 2018 was primarily driven by eliminating the warrant share value associated with any future equity issuance and a decrease in Weatherford’s stock price.

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Table of Contents Item 8 | Notes to the Consolidated Financial Statements

equity issuance and a decrease in Weatherford’s stock price.

The change in fair value of the warrant during 2017 was principally due to a decrease in Weatherford’s stock price.

Fair Value Hedges

We may use interest rate swaps to help mitigate exposures related to changes in the fair values of fixed-rate debt.

The interest rate swap is recorded at fair value with changes in fair value recorded in earnings.

The carrying value of fixed-rate debt would be adjusted for changes in interest rates, with the changes in value recorded in earnings.

After termination of the hedge, any discount or premium on fixed-rate debt is amortized to interest expense over the remaining term of the debt.

As of December 31, 2019 , we did not have any fair value hedges designated.

Cash Flow Hedges

We may use interest rate swaps to mitigate our exposure to variability in forecasted cash flows due to changes in interest rates.

In 2008, we entered into interest rate derivative instruments to hedge projected exposures to interest rates in anticipation of a debt offering.

These hedges were terminated at the time of the issuance of the debt in 2008, and the associated loss was being amortized from “ Accumulated Other Comprehensive Income (Loss) ” to interest expense over the remaining term of that debt and was fully recognized under ASC 852 and Fresh Start Accounting.

As of December 31, 2019 , we did not have any cash flow hedges designated.

Other Derivative Instruments

We enter into contracts to hedge our exposure to currency fluctuations in various foreign currencies.

At December 31, 2019 and 2018 , we had outstanding foreign currency forward contracts with notional amounts aggregating to $ 389 million and $ 435 million , respectively.

At December 31, 2020 and December 31, 2019, we had outstanding foreign currency forward contracts with notional amounts aggregating to $ 337 million and $ 389 million, respectively.

These foreign currency forward contracts are not designated as hedges under ASU 2014-03 , Derivatives and Hedging (Topic 815) .

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The amounts actually exchanged at maturity are calculated by reference to the notional amounts and by other terms of the derivative contracts, such as exchange rates.

Our foreign currency derivatives are not designated as hedges under ASC 815, and the changes in fair value of the contracts are recorded in each period in “ Other Income (Expense), Net ” on the accompanying Consolidated Statements of Operations .

The amount of derivative instruments’ gain or (loss) on the Consolidated Statements of Operations is in the table below.

Year Ended 12/31

(Dollars in millions)

Classification

Foreign Currency Forward Contracts

Other Income (Expense), Net

Old Warrant on Weatherford Shares

Warrant Fair Value Adjustment

Our foreign currency derivatives are not designated as hedges under ASC 815, and the changes in fair value of the contracts were not material to our consolidated results and are recorded in each period in “Other Expense, Net” on the accompanying Consolidated Statements of Operations.

Retirement and Employee Benefit Plans

We have defined contribution plans covering certain employees.

Contribution expenses related to these plans totaled $ 31 million , $ 37 million and $ 24 million for the Predecessor Period and years ended December 31, 2018 and 2017 , respectively.

Contribution expenses for the Successor Period were not material.

The increase in employer contributions subsequent to 2017 relates primarily to the recommencement of employer matching contributions to our U.S.

Contribution expenses related to these plans totaled $ 13 million, $ 31 million and $ 37 million for the Successor year ended December 31, 2020, the 2019 Predecessor Period and the year ended December 31, 2018, respectively.

Contribution expense for the 2019 Successor Period was not material.

The decrease in 2020 relates primarily to the suspension of employer matching contributions to our U.S.

401(k) savings plan and other contribution plans sponsored by the Company.

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Plan benefits are generally based on factors such as age, compensation levels and years of service.

Net periodic benefit income/cost related to these plans totaled $ 5 million of cost, $ 8 million of cost, and $ 38 million of income for the Predecessor Period and the years ended December 31, 2018 and 2017 respectively.

Net periodic benefit cost related to these plans totaled $ 2 million, $ 5 million, and $ 8 million for the Successor year ended December 31, 2020, the 2019 Predecessor Period and the Predecessor year ended December 31, 2018, respectively.

Net periodic benefit cost for the 2019 Successor Period was not material.

The decrease in net periodic benefit cost in the Predecessor Period is due primarily to the conversion of our Netherlands plan from

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Table of Contents Item 8 | Notes to the Consolidated Financial Statements

defined benefit to defined contribution which led to no defined benefit expense for the year and a curtailment gain for that plan.

The change in net periodic benefit cost in 2018 was due primarily to amortization of the unrecognized net gain associated with our supplemental executive retirement plan in 2017.

The projected benefit obligations on a consolidated basis were $ 198 million and $ 173 million as of December 31, 2019 and 2018 , respectively.

The increase year over year is due primarily to actuarial losses as a result of lower discount rates.

The fair values of plan assets on a consolidated basis (determined primarily using Level 2 inputs) were $ 144 million and $ 123 million as of December 31, 2019 and 2018 , respectively.

The increase in plan assets year over year is due primarily to positive asset returns.

The decrease in net periodic benefit cost in 2020 is due to curtailment gains related to headcount reduction.

The decrease in net periodic benefit cost in the 2019 Predecessor Period was due primarily to the conversion of our Netherlands plan from defined benefit to defined contribution which led to no defined benefit expense for the year and a curtailment gain for that plan.

The projected benefit obligations on a consolidated basis were $ 231 million and $ 198 million as of December 31, 2020 and December 31, 2019, respectively.

The increase year over year is due primarily to actuarial losses as a result of lower discount rates along with fluctuations in foreign currency.

The fair values of plan assets on a consolidated basis (determined primarily using Level 2 inputs) were $ 164 million and $ 144 million as of December 31, 2020 and December 31, 2019, respectively.

The increase in plan assets year over year is due primarily to positive asset returns as well as foreign currency fluctuations.

As of December 31, 2020 and December 31, 2019, the net underfunded obligation was substantially all recorded within Other Non-current Liabilities.

Additionally, the consolidated pre-tax amount in accumulated other comprehensive income (loss) as of December 31, 2019, that has not yet been recognized as a component of net periodic benefit cost was a net gain of $ 2 million .

The consolidated pre-tax amount in accumulated other comprehensive income (loss) as of December 31, 2018, along with gains (losses) incurred up to December 13, 2019 have been eliminated in conjunction with Fresh Start Accounting.

Additionally, the consolidated pre-tax amount in accumulated other comprehensive income (loss) as of December 31, 2020 and 2019, that has not yet been recognized as a component of net periodic benefit cost was a net loss of $ 12 million and net gain of $ 2 million, respectively.

The weighted average assumption rates used for benefit obligations were as follows:

Period From 12/14/19

Year Ended December 31,

Years Ended December 31,

Discount rate:

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2.50 % - 3.25 %

3.00% - 4.25%

International Plans 0.40 % - 5.85 %

0.80 % - 6.25 %

1.85% - 7.25%

Rate of Compensation Increase:

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2.00 % - 3.50 %

2.00% - 3.50%

During the Predecessor Period and the year ended December 31, 2018 , we made contributions and paid direct benefits of $ 5 million and $ 5 million , respectively, in connection with our defined benefit pension and other post-retirement benefit plans.

During the year ended December 31, 2020 and the 2019 Predecessor Period, we made contributions and paid direct benefits of $ 5 million and $ 5 million, respectively, in connection with our defined benefit pension and other post-retirement benefit plans.

Contributions in the 2019 Successor Period were immaterial.

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On September 26, 2019, our parent company ceased to be a Swiss tax resident and became an Irish tax resident subject to tax under the Irish tax regime.

Our income derived from sources outside Switzerland are exempt from Swiss cantonal and communal tax and are also granted participation relief from Swiss federal tax for qualifying dividend income and capital gains related to the sale of qualifying investments in subsidiaries.

The participation relief should result in a full exemption of participation income from Swiss federal income tax.

Our income tax provision from continuing operations consisted of the following:

Successor Predecessor

Period From Period From

12/14/2019 1/1/2019

Year Ended through through Year Ended

(Dollars in millions) 12/31/2020 12/31/2019 12/13/2019 2018

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Provision for Income Taxes $ ( 85 ) $ ( 9 ) $ ( 135 ) $ ( 34 )

The difference between the income tax provision at the Irish and Swiss income tax rate and the income tax (provision) benefit attributable to “Loss Before Income Taxes” for the 2019 Successor and Predecessor Periods, and the Predecessor years ended December 31, 2018 and 2017 is analyzed below:

The difference between the income tax provision at the Irish and/or Swiss income tax rate and the income tax (provision) benefit attributable to “Loss Before Income Taxes” for the 2020 Successor year, 2019 Successor and Predecessor Periods, and the Predecessor year ended December 31, 2018 is analyzed below:

Successor Predecessor

Period From Period From

12/14/2019 1/1/2019

Year Ended through through Year Ended

(Dollars in millions) 12/31/2020 12/31/2019 12/13/2019 2018

Irish or Swiss Income Tax rate at 25.0 % and 7.83 %, respectively

Tax on Operating Earnings Subject to Rates Different than the Irish or Swiss Federal Income Tax Rate

Estimated Tax on Settlement of Liabilities Subject to Compromise and Fresh Start Accounting

Change in Valuation Allowance Attributed to Estimated Tax on Settlement of Liabilities Subject to Compromise and Fresh Start Accounting

Tax Reform - Remeasure of U.S.

Deferred Tax Assets

Change in Valuation Allowance Attributed to U.S.

$ 454 $ 2 $ ( 299 ) $ 216

Tax on Operating Earnings/Losses Subject to Rates Different than the Irish or Swiss Federal Income Tax Rate ( 182 ) ( 65 ) 197 ( 387 )

Change in Valuation Allowance ( 330 ) 56 17 166

Change in Uncertain Tax Positions ( 27 ) ( 2 ) ( 18 ) ( 29 )

Estimated Tax on Settlement of Liabilities Subject to Compromise and Fresh Start Accounting — — ( 495 ) —

Change in Valuation Allowance Attributed to Estimated Tax on Settlement of Liabilities Subject to Compromise and Fresh Start Accounting — — 463 —

Provision for Income Taxes $ ( 85 ) $ ( 9 ) $ ( 135 ) $ ( 34 )

Our income tax provision in the Successor Period was $ 9 million on a loss before income taxes of $ 15 million .

The primary drivers of the tax expense for the Successor Period included profits in certain jurisdictions, deemed profit countries and withholding taxes on intercompany and third-party transactions that do not directly correlate to ordinary income or loss.

Our income tax provisions generally do not correlate to our consolidated income (loss) before tax.

Our income taxes provisions are primarily driven by profits in certain jurisdictions, deemed profit countries and withholding taxes on intercompany and third-party transactions that do not directly correlate to ordinary income or loss.

Impairments and other charges recognized do not result in significant tax benefit as a result of our inability to forecast realization of the tax benefit of such losses.

Tax expense for the year ended December 31, 2020 includes $ 10 million to recognize valuation allowance in jurisdictions where we are no longer able to forecast taxable income.

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Table of Contents Item 8 | Notes to the Consolidated Financial Statements

Our income tax provision in the 2019 Predecessor Period was $ 135 million on earnings before income taxes of $ 3.8 billion .

The primary drivers of the tax expense for the 2019 Predecessor Period included profits in certain jurisdictions, deemed profit countries and withholding taxes on intercompany and third-party transactions that do not directly correlate to ordinary income or loss.

Our results for period also include $ 32 million of tax expense related to the Fresh Start accounting impacts and $ 14 million of tax benefit primarily related to goodwill and other asset impairments or write-downs.

Other charges of approximately $ 77 million , related to restructuring expense and gain on the sale of businesses, resulted in $ 3 million in tax benefit.

Our results for the 2019 Predecessor period include $ 32 million of tax expense related to the Fresh Start accounting impacts and $ 14 million of tax benefit primarily related to goodwill and other asset impairments and write downs.

We also recognized $ 4.3 billion gain on Settlement of Liabilities Subject to Compromise as a result of the bankruptcy (See “Note 3 – Fresh Start Accounting”) with no tax impact due to it being attributed to Bermuda, which has no income tax regime, and the U.S., which resulted in the reduction of our U.S.

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Prepetition charges (charges prior to Petition Date) and reorganization items (charges after Petition Date) had no significant tax impact.

Our income tax provision in 2018 was $ 34 million on a loss before income taxes of $ 2.8 billion .

Results for the year ended December 31, 2018 include losses with no significant tax benefit.

The tax expense for the year ended December 31, 2018 also includes withholding taxes and deemed profit taxes that do not directly correlate to ordinary income or loss.

The primary driver of the tax expense was due to profits in certain jurisdictions, deemed profit countries and withholding taxes on intercompany and third-party transactions.

Our results for 2018 also include charges with $ 70 million tax benefit principally related to the $ 1.9 billion goodwill impairment.

The other asset write-downs and other charges, including $ 238 million in long-lived asset impairments, $ 126 million in restructuring charges and the warrant fair value adjustment of $ 70 million resulted in no significant tax benefit.

Our income tax provision in 2017 was $ 137 million on a loss before income taxes of $ 2.7 billion .

The primary driver of the tax expense was due to profits in certain jurisdictions, deemed profit countries and withholding taxes on intercompany and third-party transactions.

In addition, the Company concluded that it needed to record a valuation allowance of $ 73 million in the fourth quarter of 2017 against certain previously benefited deferred tax assets since it cannot support that it is more likely than not that the deferred tax assets will be realized.

The additional valuation allowance was partially offset by a one-time $ 52 million benefit as a result of the recent U.S tax reform.

Our results for 2017 also include charges with no significant tax benefit principally related to asset write-downs and other charges including $ 928 million in long-lived asset impairments, $ 540 million inventory charges including excess and obsolete, $ 230 million in the write-down of Venezuelan receivables and $ 66 million of other write-downs charges and credits, $ 183 million in restructuring charges and the warrant fair value adjustment of $ 86 million .

On December 22, 2017, the U.S.

enacted into law a comprehensive tax reform bill (the “Tax Cuts and Jobs Act,” or “TCJA”).

The TCJA significantly revises the U.S.

corporate income tax by, among other things, lowering the statutory corporate tax rate from 35% to 21% , eliminating certain deductions, imposing a mandatory one-time tax on accumulated earnings of foreign subsidiaries as of 2017 held in cash and illiquid assets (with the latter taxed at a lower rate), and a shift of the U.S.

taxation of multinational corporations from a tax on worldwide income to a partial territorial system (along with certain rules designed to prevent erosion of the U.S.

income tax base, such as the base erosion and anti-abuse tax).

The permanent reduction in the U.S.

statutory corporate tax rate to 21% from 35% decreased the amount of the U.S.

deferred tax assets and liabilities by $ 249 million with a decrease to the valuation allowance of $ 301 million for a net tax benefit of $ 52 million recorded for the year ended December 31, 2017.

The TCJA did not have other impacts on the Company’s effective tax rate because of the valuation allowance against the U.S.

deferred tax assets.

Any potential impact would be offset by un-benefitted U.S.

net operating loss carryforwards.

As we did not have all the necessary information to analyze all effects of this tax reform as of December 31, 2017, this was a provisional amount which we believed represented a reasonable estimate of the accounting implications of this tax reform.

We finalized our accounting for this matter during 2018 and concluded that no adjustments to the provisional amounts recorded during 2017 were identified during the twelve months ended December 31, 2019 or 2018.

Our results for the 2018 Predecessor period include charges with $ 70 million tax benefit principally related to the$ 1.9 billion goodwill impairment.

Other significant 2018 charges did not result in significant tax benefit.

Deferred tax assets and liabilities are recognized for the estimated future tax effects of temporary differences between the tax basis of an asset or liability and its reported amount in the Consolidated Financial Statements.

The measurement of deferred tax assets and liabilities is based on enacted tax laws and rates currently in effect in each of the jurisdictions in which we have operations.

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Table of Contents Item 8 | Notes to the Consolidated Financial Statements

The components of the net deferred tax asset (liability) attributable to continuing operations were as follows:

The components of the net deferred tax asset (liability) were as follows:

December 31, December 31,

(Dollars in millions) 2020 2019

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Net Operating Losses Carryforwards $ 881 $ 696

Unused Recognized Built in Losses 39 —

Accrued Liabilities and Reserves 175 155

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Property, Plant and Equipment 129 63

Inventory 52 67

Interest Deferral 55 56

State Deferred 84 87

Other Differences between Financial and Tax Basis 92 121

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Deferred Tax Liabilities:

Property, Plant and Equipment

Intangible Assets ( 45 ) ( 66 )

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The Company considers all available evidence (both positive and negative) when determining whether a valuation allowance is required.

The Company evaluated possible sources of taxable income that may be available to realize the benefit of deferred tax assets, including projected future taxable income, the reversal of existing temporary differences, taxable income in carryback years and available tax planning strategies, and the impact of fresh start accounting in making this assessment.

The Company evaluates possible sources of taxable income that may be available to realize the benefit of deferred tax assets, including projected future taxable income, the reversal of existing temporary differences, taxable income in carryback years and available tax planning strategies, and the impact of fresh start accounting in making this assessment.

The realizability of the deferred tax assets is dependent upon judgments and assumptions inherent in the determination of future taxable income, including factors such as future operation conditions (particularly as related to prevailing oil prices and market demand for our products and services).

We will continue to evaluate whether valuation allowances are needed in future reporting periods.

Valuation allowances will remain until the Company can determine that net deferred tax assets are more likely than not to be realized.

In the event that the Company were to determine that it would be able to realize the deferred income tax assets in the future as a result of significant improvement in earnings as a result of market conditions, the Company would adjust the valuation allowance, reducing the provision for income taxes in the period of such adjustment.

The decrease in the valuation allowance in 2019 is primarily attributable to a decrease of un-benefited net operating loss carryforwards, primarily attributed to the US (see discussion below), and the foreign exchange remeasurement of our net deferred tax assets.

The increase in the valuation allowance in 2020 is primarily attributable to an increase of un-benefited net operating loss carryforwards, primarily attributed to jurisdictions where those losses are not expected to be realized.

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Table of Contents Item 8 | Notes to the Consolidated Financial Statements

Deferred income taxes generally have not been recognized on the cumulative undistributed earnings of our non-Irish subsidiaries because they are considered to be indefinitely reinvested.

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Due to complexities in the tax laws and the manner of repatriation, it is not practicable to estimate the unrecognized amount of deferred income taxes and the related dividend withholding taxes associated with these undistributed earnings.

Weatherford International plc – 2019 Form 10-K | 104

Table of Contents Item 8 | Notes to the Consolidated Financial Statements

At December 31, 2020, we had approximately $ 5.6 billion of NOLs in various jurisdictions, $ 2.0 billion of which were generated by certain U.S.

subsidiaries.

On December 13, 2019 the company emerged from Chapter 11 of the U.S.

bankruptcy code.

As a result, in the U.S.

We estimate that the maximum U.S.

NOLs available for utilization in the future is $ 639 million as a result of the tax consequences of our emergence from bankruptcy as described below.

As a result of our emergence on December 13, 2019, in the U.S.

approximately $ 480 million of cancellation of indebtedness (COD) income was realized for tax purposes.

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As a result, there was no impact from the COD Income.

subsidiaries experienced an ownership change as the Company’s emergence from Chapter 11 bankruptcy proceedings is considered a “ownership change” for purposes of Internal Revenue Code section 382.

The Internal Revenue Code sections 382 and 383 impose limitations on the ability of a company to utilize tax attributes after experiencing an “ownership change.” We estimate that we would have an annual limitation of approximately $ 23 million against the utilization of our U.S.

loss carryforwards and other tax attributes, including credits, in the future, subject to the final valuation of the U.S.

As a result, $ 1.2 billion of the U.S.

loss carryforward will expire before it can be utilized.

The gross amount of our U.S.

subsidiaries NOLs that we will be able to utilize is not $ 1.9 billion and our net operating loss carryforward deferred tax asset decreased by $ 257 million (tax effect of the anticipated expired U.S.

loss carryforward).

The Company maintains a valuation allowance against the U.S.

net deferred tax asset position so the adjustment to the U.S.

loss carryforward had a corresponding reduction to the valuation allowance and therefore resulted in no current financial impact.

The deferred tax asset, as of December 31, 2019, reflects the maximum amount of U.S.

loss carryforward that the Company may be able to utilize, which is $ 639 million .

Additionally, upon emergence our U.S.

subsidiaries experienced an ownership change as the Company’s emergence was considered an “ownership change” for purposes of Internal Revenue Code section 382.

The Internal Revenue Code sections 382 and 383 impose limitations on the ability of a company to utilize tax attributes after experiencing an “ownership change.” As a result, we have estimated our annual limitation is approximately $ 23 million against the utilization of our U.S.

loss carryforwards and other tax attributes, including unused recognized built-in losses and U.S.

interest deferral.

The annual limitation will result in approximately $ 1.2 billion of our U.S.

loss carryforwards expiring unused.

Upon emergence, we decreased our NOL deferred tax asset and also decreased our valuation allowance each by $ 257 million to remove these lost NOLs.

Our non-indefinite loss carryforwards, if not utilized, will mostly expire for U.S.

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subsidiaries.

At December 31, 2019, we had $ 77 million of tax credit carryovers, of which $ 66 million is for U.S.

At December 31, 2020, we had $ 11 million of tax credit carryovers, all of which are related to our non-U.S.

subsidiaries.

credits primarily consists of $ 35 million of research and development tax credit carryforwards which expire from 2020 through 2038 , and $ 31 million of foreign tax credit carryforwards which expire from 2020 through 2038 .

We anticipate that all the U.S.

credits will expire before they can be utilized because of the annual limitation.

As a result, as of December 31, 2019, our tax credit carryforward is $ 11 million and the tax credit deferred tax asset has been decreased by $ 66 million with an offsetting reduction in valuation allowance.

A tabular reconciliation of the total amounts of uncertain tax positions at the beginning and end of the period is as follows:

Successor Predecessor

Period From Period From

12/14/2019 1/1/2019

Year Ended through through Year Ended

(Dollars in millions) 12/31/2020 12/31/2019 12/13/2019 2018

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Balance at End of Year $ 222 $ 214 $ 213 $ 195

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Table of Contents Item 8 | Notes to the Consolidated Financial Statements

Substantially all of the uncertain tax positions, if recognized in future periods, would impact our effective tax rate.

To the extent penalties and interest would be assessed on any underpayment of income tax, such amounts have been accrued and classified as a component of income tax expense and other non-current liabilities in the Consolidated Financial Statements in accordance with our accounting policy.

We recorded an expense of $ 1 million , $ 15 million , $ 1 million and $ 10 million in interest and penalty for the 2019 Successor and Predecessor Periods and the years ended December 31, 2018 and 2017, respectively.

We recorded an expense of $ 11 million, $ 1 million, $ 15 million, and $ 1 million in interest and penalty for Successor year ended December 31, 2020, the 2019 Successor and Predecessor Periods and the year ended December 31, 2018, respectively.

The amounts in the table above exclude cumulative accrued interest and penalties of $ 89 million, $ 77 million and $ 60 million at December 31, 2020, 2019, and 2018, respectively, which are included in other liabilities.

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Table of Contents Item 8 | Notes to the Consolidated Financial Statements

We are subject to income tax in many of the approximately 80 countries where we operate.

We are subject to income tax in many of the over 75 countries where we operate.

As of December 31, 2020, the following table summarizes the tax years that remain subject to examination for the major jurisdictions in which we operate:

Tax Jurisdiction Tax Years under Examination

Canada 2012 - 2020

Mexico 2009 - 2020

Russia 2017 - 2020

Switzerland 2012 - 2020

United States 2017 - 2020

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Disputes, Litigation and Legal Contingencies

We are subject to lawsuits and claims arising out of the nature of our business.

We have certain claims, disputes and pending litigation for which we do not believe a negative outcome is probable or for which we can only estimate a range of liability.

It is possible, however, that an unexpected judgment could be rendered against us, or we could decide to resolve a case or cases, that would result in a liability that could be uninsured and beyond the amounts we currently have reserved and in some cases those losses could be material.

If one or more negative outcomes were to occur relative to these cases, the aggregate impact to our financial condition could be material.

Due to the COVID-19 pandemic, courts in many jurisdictions around the world have been temporarily closed for trials and hearings, which has resulted in delays in many of our litigation matters.

Accrued litigation and settlements recorded in “Other Current Liabilities” on the accompanying Consolidated Balance Sheets as of December 31, 2020 and December 31, 2019 were $ 43 million and $ 44 million, respectively.

Shareholder Litigation

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(“GAMCO”), purportedly on behalf of itself and other similarly situated shareholders, filed a lawsuit asserting violations of the federal securities laws against certain then-current and former officers and directors of the Company.

GAMCO alleges violations of Sections 10(b) and 20(b) of the Securities Exchange Act of 1934, and violations of Sections 11 and 15 of the Securities Act of 1933 based on allegations that the Company and certain of its officers made false and/or misleading statements, and alleged non-disclosure of material facts, regarding the Company’s business, operations, prospects and performance.

GAMCO alleges violations of Sections 10(b) and 20(b) of the Securities Exchange Act of 1934, and violations of Sections 11 and 15 of the Securities Act of 1933, as amended (the “Securities Act”) based on allegations that the Company and certain of its officers made false and/or misleading statements, and alleged non-disclosure of material facts, regarding our business, operations, prospects and performance.

GAMCO seeks damages on behalf of purchasers of the Company’s ordinary shares from October 26, 2016 through May 10, 2019.

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4:19-cv-03363.

We cannot reliably predict the outcome of GAMCO’s claims, including the amount of any possible loss.

The District Court Judge appointed Utah Retirement Systems (“URS”) as Lead Plaintiff, and on March 16, 2020, URS filed its Amended Complaint.

URS added the Company as a defendant but dropped the claims against non-officer board members and all the claims under the Securities Act.

The defendants filed their motion to dismiss on May 18, 2020, and plaintiffs filed their response on July 3, 2020.

The defendants filed a reply brief on August 3, 2020, and now the Court will rule on the motion to dismiss.

We cannot reliably predict the outcome of the claims, including the amount of any possible loss.

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Table of Contents Item 8 | Notes to the Consolidated Financial Statements

Prior Shareholder Litigation

In 2010, three shareholder derivative actions were filed, purportedly on behalf of the Company, asserting breach of duty and other claims against certain then current and former officers and directors of the Company related to the United Nations oil-for-food program governing sales of goods into Iraq, the Foreign Corrupt Practices Act of 1977 and trade sanctions related to the U.S.

In 2010, three shareholder derivative actions were filed, and in 2014 a fourth shareholder derivative action was filed, purportedly on behalf of the Company, asserting breach of duty and other claims against certain then-current and former officers and directors of the Company related to the United Nations oil-for-food program governing sales of goods into Iraq, the Foreign Corrupt Practices Act of 1977 and trade sanctions related to the U.S.

government investigations disclosed in our SEC filings since 2007.

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On February 13, 2018, the trial court dismissed with prejudice certain directors for lack of jurisdiction.

The plaintiffs have appealed the jurisdictional ruling.

We cannot reliably predict the outcome of the remaining claims, including the amount of any possible loss.

Government Investigation

As of December 31, 2016, the Company had agreed to pay as part of the terms of a settlement with the SEC a total civil monetary penalty of $ 140 million relating to the SEC and the U.S.

Department of Justice (“DOJ”) investigation of certain accounting issues associated with the material weakness in our internal control over financial reporting for income taxes for historical periods indicated in 2012 and 2011 SEC filings reporting the historical financial restatements.

In addition, certain reports and certifications

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Table of Contents Item 8 | Notes to the Consolidated Financial Statements

regarding our internal controls over accounting for income taxes were delivered to the SEC during the two years following the settlement.

We have completed these reports as of April 2018.

A payment of $ 50 million was made in 2016 and the remaining $ 90 million was paid in 2017.

The 2017 payments are reported under the caption “ Other Assets and Liabilities, Net ” on our Consolidated Statements of Cash Flows .

Although the plaintiffs appealed the jurisdictional ruling, on June 19, 2020, the plaintiffs filed a motion to dismiss the appeal with prejudice.

This litigation has concluded.

Rapid Completions and Packers Plus Litigation

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Patent and Trademark Office (“USPTO”).

On February 22, 2018, the PTAB issued IPR decisions finding that all of the claims of the ‘505, ‘634, and ‘774 patents that were challenged by the Company in the IPRs are invalid.

On October 16, 2018, the PTAB issued an IPR decision finding that all of the claims of the ‘501 patent are invalid.

RC has appealed the decisions of the PTAB.

On June 3, 2019, the Federal Circuit heard RC’s oral arguments on the appeal related to the ‘505, ‘634, and ‘774 patents and affirmed on June 6, 2019 the PTAB’s decision that the patents are invalid.

The oral argument on RC’s appeal of the of the PTAB’s decision on the ‘501 patent took place on January 8, 2020, and the Federal Circuit affirmed the PTAB’s decision on January 21, 2020.

All of the claims of the ‘501, ‘505, ‘634, and ‘774 patents that were asserted against the Company in the U.S.

litigation are now invalid.

With the exception of the Company’s potential claim for inequitable conduct against Packers Plus, the litigation in the U.S.

The PTAB issued decisions during 2018 and 2019 finding that all the claims of the asserted patents challenged by the Company in the IPRs were invalid.

RC appealed those decisions to the Federal Circuit, which issued a decision affirming the PTAB’s decision that the patents are invalid on January 21, 2020.

The litigation in the U.S.

has concluded.

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On January 5, 2018, Packers Plus and RC filed their Notice of Appeal.

The Company filed its responsive brief in June 2018.

The hearing of the appeal took place on February 6, 2019, and on April 24, 2019, the appeal was dismissed in favor of Weatherford.

The appeal was dismissed in favor of Weatherford.

Packers Plus and RC filed an Application for Leave to the Supreme Court of Canada requesting that the Supreme Court hear their appeal from the appellate court’s decision, but the Supreme Court dismissed the Application, thus concluding the litigation.

At this time, we believe it is unlikely that we will incur a loss related to these patent infringement matters, and therefore we have not accrued any loss provisions related to these matters.

For claims, disputes and pending litigation in which we believe a negative outcome is probable and a loss can be reasonably estimated, we have recorded a liability for the expected loss.

In addition, we have certain claims, disputes and pending litigation for which we do not believe a negative outcome is probable or for which we can only estimate a range of liability.

It is possible, however, that an unexpected judgment could be rendered against us, or we could decide to resolve a case or cases, that would result in liability that could be uninsured and beyond the amounts we currently have reserved and in some cases those losses could be material.

If one or more negative outcomes were to occur relative to these matters, the aggregate impact to our financial condition could be material.

Accrued litigation and settlements recorded in “Other Current Liabilities” on the accompanying Consolidated Balance Sheets as of December 31, 2019 and 2018 were $ 44 million and $ 29 million , respectively.

The increase in our accrued litigation balance was incurred primarily in our 2019 Predecessor Period.

Environmental Contingencies

We have obligations and expect to incur capital, operating and maintenance, and remediation expenditures, as a result of compliance with environmental laws and regulations.

Among those obligations, are the current requirements imposed by the Texas Commission on Environmental Quality (“TCEQ”) at the former Universal Compression facility in Midland, Texas.

At this location we are performing a TCEQ-approved Remedial Action Plan (“RAP”) to address contaminated ground water.

The performance of the RAP and related expenses are scheduled to be performed over a ten to twenty-year period and, may cost as much as $ 6 million, which is recorded as undiscounted obligation on the Consolidated Balance Sheets as of December 31,

Weatherford International plc – 2020 Form 10-K | 89

Table of Contents Item 8 | Notes to the Consolidated Financial Statements

We continuously monitor and strive to maintain compliance with changes in laws and regulations that impact our business.

Shareholders’ Equity (Deficiency)

Changes in our ordinary shares issued were as follows:

(Shares in millions)

Balance at December 31, 2017 (Predecessor)

Equity Awards Granted, Vested and Exercised

(Shares in millions) Issued

Balance at December 31, 2018 (Predecessor) 1,002

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Balance at December 31, 2019 (Successor) 70

Share Issuance —

Balance at December 31, 2020 (Successor) 70

Upon the effectiveness of the Plan, all previously issued and outstanding equity interests in the Predecessor were cancelled and the Company issued 69,999,954 “New Ordinary Shares” to the holders of the Company’s existing senior notes and holders of “Old Ordinary Shares”.

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On the Effective Date, the Company issued New Warrants to holders of the Company’s Old Ordinary Shares, to purchase up to an aggregate of 7,777,779 New Ordinary Shares in the Company, par value $0.001, at an exercise price of $ 99.96 per ordinary share.

The New Warrants are equity classified and, upon issuance, have a value of $ 31 million , which was recorded in “ Capital in Excess of Par Value .” At December 31, 2019 no warrants had been exercised.

The warrant fair value was a Level 2 valuation and is estimated using the Black Scholes valuation model.

The New Warrants are equity classified and, upon issuance, have a value of $ 31 million, which was recorded in “Capital in Excess of Par Value.” The warrant fair value was a Level 2 valuation and is estimated using the Black Scholes valuation model.

Inputs to the model include Weatherford’s share price, volatility of our share price, and the risk-free interest rate.

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All unexercised New Warrants will expire, and the rights of the warrant holders to purchase New Ordinary Shares will terminate, on the Expiration Date.

On November 21, 2016, we issued 84.5 million ordinary shares at a price of $ 5.40 per ordinary share, and a warrant (“Old Warrant”) to purchase 84.5 million ordinary shares on or prior to May 21, 2019 at an exercise price of $ 6.43 per ordinary share to a selected institutional investor.

On May 21, 2019, the Old Warrant option period lapsed and the warrants expired unexercised.

During 2020, an immaterial number of warrants were exercised.

Weatherford International plc – 2020 Form 10-K | 90

2 unchanged sentences

The following table presents the changes in our accumulated other comprehensive loss by component:

(Dollars in millions)

Currency Translation Adjustment

Defined Benefit Pension

Deferred Loss on Derivatives

Balance at December 31, 2017 (Predecessor)

Other Comprehensive (Loss) Income before Reclassifications

Reclassifications

(Dollars in millions) Currency Translation Adjustment Defined Benefit Pension Deferred Loss on Derivatives Total

Balance at December 31, 2018 (Predecessor) $ ( 1,724 ) $ ( 14 ) $ ( 8 ) $ ( 1,746 )

1 unchanged sentence

Reclassifications — 1 8 9

Net Activity 52 ( 11 ) 8 49

Balance at December 13, 2019 (Predecessor) $ ( 1,672 ) $ ( 25 ) $ — $ ( 1,697 )

3 unchanged sentences

Balance at December 31, 2019 (Successor) $ 7 $ 2 $ — $ 9

Other Comprehensive Income ( 38 ) ( 14 ) — ( 52 )

Balance at December 31, 2020 (Successor) $ ( 31 ) $ ( 12 ) $ — $ ( 43 )

Weatherford International plc – 2020 Form 10-K | 91

2 unchanged sentences

As part of the emergence from bankruptcy, outstanding awards under all Predecessor equity incentive plans were cancelled, and the 2019 Plan was approved by the Successor.

The share-based compensation plans permit the grant of options, stock appreciation rights, restricted share awards restricted share units (“RSUs”), performance share awards, performance unit awards (“PUs”), other share-based awards and cash-based awards to any employee, non-employee directors and other individual service providers or any affiliate.

In addition, the Predecessor had share-based compensation provisions under the Employee Share Purchase Plan (“ESPP”).

For restricted share awards and RSUs, compensation expense is recognized on a straight-line basis over the requisite service period for the separately vesting portion of each award.

For PUs, compensation expense is recognized on a straight-line basis over the requisite service period for the entire award.

Upon emergence from bankruptcy, all remaining compensation expense was recognized when certain shares accelerated due to change in control provisions in the original award agreements and all remaining outstanding awards were cancelled.

The provisions of each award vary based on the type of award granted and are determined by the Compensation Committee of our Board of Directors.

Those awards that are based on a specific contractual term will be granted with a term not to exceed 10 years .

Upon grant of a restricted share award, the recipient has the rights of a shareholder, including but not limited to the right to vote such shares and the right to receive any dividends paid on such shares, but not the right to disposition prior to vesting.

Recipients of RSUs do not have the rights of a shareholder until such date as the shares are issued or transferred to the recipient under the Plan.

As of December 31, 2019 , we had four million shares available for grant under our Successor share-based compensation plan.

Share-Based Compensation Expense

We did not recognize any share-based compensation expense during the Successor Period.

We recognized the following share-based compensation expense during the 2019 Predecessor Period and the years ended December 31, 2018 and December 31, 2017 :

(Dollars in millions)

Share-based Compensation

Related Tax (Provision) Benefit

Weatherford International plc – 2019 Form 10-K | 110

Table of Contents Item 8 | Notes to the Consolidated Financial Statements

Restricted Share Awards and Restricted Share Units

There were no restricted share awards outstanding in 2019.

RSUs vest based on continued employment, generally over a three -year period.

The fair value of RSUs is determined based on the closing price of our shares on the date of grant.

The total fair value, less forfeitures, is expensed over the vesting period.

The weighted-average grant date fair value of RSUs granted during the 2019 Predecessor Period and the years ended December 31, 2018 and December 31, 2017 was $ 0.90 , $ 1.76 and $ 4.26 , respectively.

The total fair value of restricted share awards and RSUs vested during the 2019 Predecessor Period and the years ended December 31, 2018 and December 31, 2017 was $ 2 million , $ 17 million and $ 30 million , respectively.

A summary of RSU activity is presented below:

Weighted Average

Grant Date Fair Value

(In thousands)

Non-Vested at December 31, 2018 (Predecessor)

Cancelled or Forfeited

Non-Vested at December 13, 2019 (Predecessor)

Granted, Vested, Cancelled or Forfeited

Non-Vested at December 31, 2019 (Successor)

Performance Units

The performance units granted by the Predecessor had a three -year service period and were to vest upon the Company’s achievement of certain market-based and performance goals.

Depending on the performance levels achieved in relation to the predefined targets, shares may be issued for up to 200 % of the units awarded.

If the established performance goals are not met no shares are issued.

In addition, the award agreement had a 200% accelerated vesting condition in the event of a change in control.

The grant date fair value of the performance units with market-based goals was determined through use of the Monte Carlo simulation method .

The assumptions used in the Monte Carlo simulation during the year ended December 31, 2018, included a weighted average risk-free rate of 2.28 % , volatility of 63.0 % and a zero dividend yield.

The grant date fair value of the performance units with performance goals was determined based on the closing price of our shares on the date of grant.

The weighted-average grant date fair value of all performance units we granted during the years ended December 31, 2018 and 2017 was $ 4.57 and $ 6.06 , respectively.

For the 2019 Predecessor Period, 6 million shares were issued when the bankruptcy triggered a change of control clause accelerating the vesting of all outstanding performance units at 200%.

The total fair value of these shares was $ 95 thousand .

For the year ended December 31, 2018, we did not issue any shares for performance units.

For the year ended December 31, 2017, 145 thousand shares were issued for the performance units related to the departure of a former executive officer.

The total fair value of these shares was $ 1 million .

A summary of performance unit activity for the year ended December 31, 2019 , is presented below:

Performance Units

Weighted Average Grant Date Fair Value

(In thousands)

Non-vested at December 31, 2018 (Predecessor)

Cancelled or Forfeited

Non-vested at December 13, 2019 (Predecessor)

Non-vested at December 31, 2019 (Successor)

Weatherford International plc – 2019 Form 10-K | 111

Table of Contents Item 8 | Notes to the Consolidated Financial Statements

Employee Stock Purchase Plan

The Predecessor had an ESPP which permitted eligible employees to make payroll deductions to purchase Weatherford shares.

Each offering period had a six -month duration beginning on either March 1 or September 1.

Shares were purchased at 90 % of the lower of the closing price for our ordinary shares on the first or last day of the offering period.

We issued 4 million and 3 million shares under the ESPP during the years ended December 31, 2018 and 2017, respectively.

In January 2019, we temporarily suspended our ESPP due to insufficient shares remaining available for issuance under the plan as a consequence of our lower share price.

New Ordinary Shares have not been registered for issuance under our ESPP.

The 2019 Plan was amended and restated in 2020.

The share-based compensation plan permits the grant of options, share appreciation rights, restricted share awards, restricted share units, and other share-based and performance-based awards to any employee, consultant or non-employee director.

The provisions of each award vary based on the type of award granted and are determined by the Compensation and Human Resources Committee of our Board of Directors.

Restricted share units and performance-based share units granted and vested during 2020 were immaterial.

As of December 31, 2020, we had 8 million shares available for grant under our Successor share-based compensation plan.

Share-based compensation expense was immaterial and zero in the 2020 and 2019 Successor Periods, respectively.

During the 2019 and 2018 Predecessor periods, we recognized $ 46 million (which included the acceleration of share-based compensation described at “Note 3 – Fresh Start Accounting and recorded in “Impairments and Other Charges” on the accompanying Consolidated Statements of Operations) and $ 47 million, respectively, recorded in “Selling, General and Administrative” on the accompanying Consolidated Statements of Operations.

Earnings per Share

Basic earnings per share for all periods presented equals net income (loss) divided by the weighted average number of our shares outstanding during the period including participating securities.

The following discloses basic and diluted weighted average shares outstanding:

Basic earnings (loss) per share for all periods presented equals net income (loss) divided by our weighted average shares outstanding during the period.

Diluted earnings (loss) per share is computed by dividing net income (loss) by our weighted average shares outstanding during the period including potential dilutive ordinary shares.

The following table presents our basic and diluted weighted average shares outstanding and loss per share :

Successor Predecessor

Period From Period From

Year 12/14/19 1/1/2019 Year

Ended through through Ended

(Shares in millions) 12/31/2020 12/31/2019 12/13/2019 12/31/2018

Net Income (Loss) Attributable to Weatherford $ ( 1,921 ) $ ( 26 ) $ 3,661 $ ( 2,811 )

Basic and Diluted Weighted Average Shares Outstanding 70 70 1,004 997

Basic and Diluted Income (Loss) Per Share Attributable to Weatherford $ ( 27.44 ) $ ( 0.37 ) $ 3.65 $ ( 2.82 )

Our basic and diluted weighted average shares outstanding for the 2020 and 2019 Successor Periods are equivalent due to the net loss attributable to shareholders.

Diluted weighted average shares for the 2020 and 2019 Successor Periods exclude 8 million potential ordinary shares.

Our basic and diluted weighted average shares outstanding for the 2019 Predecessor Period are equivalent as we believe including the dilutive impact of our Predecessor potential shares would not be meaningful as the potential shares were cancelled pursuant to the terms of the Plan.

Our basic and diluted weighted average shares outstanding for the Successor Period, and for the years ended December 31, 2018 and 2017 , are equivalent due to the net loss attributable to shareholders.

Diluted weighted average shares outstanding for the Successor Period, and the years ended December 31, 2018 and 2017 , exclude potential shares for stock options, restricted shares, performance units, exchangeable senior notes, warrants outstanding and the ESPP as we have net losses for those periods and their inclusion would be anti-dilutive.

T he following table discloses the number of shares excluded:

(Shares in millions)

Potential Shares Excluded

Our basic and diluted weighted average shares outstanding for the 2018 Predecessor Period are equivalent due to the net loss attributable to shareholders.

Diluted weighted average shares outstanding for the 2019 and 2018 Predecessor Periods exclude 197 million and 251 million potential ordinary shares, respectively, for restricted share units, performance units, exchangeable senior notes and warrants outstanding.

Weatherford International plc – 2020 Form 10-K | 92

1 unchanged sentence

Disaggregated Revenue by Product Line and Geographic Region

The following tables disaggregate our revenues from contracts with customers by major product line and geographic region.

Equipment revenues recognized under ASC 842 was $ 12 million in the Successor Period, $ 284 million in the Predecessor Period and $ 337 million in the year ended December 31, 2018, which are included in the tables below.

Period from December 14, 2019 through December 31, 2019

(Dollars in millions)

Western Hemisphere

Eastern Hemisphere

Total Revenues

Product Lines:

Drilling and Evaluation

Well Construction

Period from January 1, 2019

to December 13, 2019

(Dollars in millions)

Western Hemisphere

Eastern Hemisphere

Total Revenues

Product Lines:

Drilling and Evaluation

Well Construction

Year Ended December 31, 2018

(Dollars in millions)

Western Hemisphere

Eastern Hemisphere

Total Revenues

Product Lines:

Drilling and Evaluation

Well Construction

Weatherford International plc – 2019 Form 10-K | 113

Table of Contents Item 8 | Notes to the Consolidated Financial Statements

Year Ended December 31, 2017

Revenues are attributable to countries based on the ultimate destination of the sale of products or performance of services.

During the second quarter of 2020, in order to support the streamlining and realignment of the business, we combined our prior reported four product lines into two product lines, and all prior periods have been retrospectively recast to conform to this new presentation.

Our two product lines are as follows:

(1) Completion and Production and (2) Drilling, Evaluation and Intervention.

The unmanned equipment that we lease to customers as operating leases consists primarily of drilling rental tools (in the Drilling, Evaluation and Intervention product line) and artificial lift pumping equipment (in the Completion and Production product line).

These equipment rental revenues are generally provided based on call-out work orders that include fixed per unit prices and are derived from short-term contracts.

The following tables disaggregate our revenues from contracts with customers by major product line and geographic region and includes equipment rental revenues recognized under Accounting Standards Update No.

2016-02, Leases (Topic 842).

Equipment revenues recognized was $ 150 million and $ 12 million in the 2020 and 2019 Successor Periods, respectively, and $ 284 million and $ 337 million in the 2019 and 2018 Predecessor Periods, respectively.

Revenues in the U.S.

were $ 720 million and $ 59 million in the 2020 and 2019 Successor Periods, respectively, and $ 1.3 billion and $ 1.6 billion in the 2019 and 2018 Predecessor Periods, respectively.

We had no revenue in our country of domicile (Ireland) in the 2020 and 2019 Successor Periods, and the 2019 and 2018 Predecessor Periods.

Successor Predecessor

Period From Period From

12/14/2019 1/1/2019

Year Ended through through Year Ended

(Dollars in millions) 12/31/2020 12/31/2019 12/13/2019 12/31/2018

Product Line Revenue by Hemisphere:

Completion and Production $ 859 $ 69 $ 1,357 $ 1,709

Drilling, Evaluation and Intervention 727 52 1,263 1,354

Western Hemisphere $ 1,586 $ 121 $ 2,620 $ 3,063

Completion and Production $ 1,020 $ 67 $ 975 $ 965

Drilling, Evaluation and Intervention 1,079 73 1,359 1,716

Eastern Hemisphere $ 2,099 $ 140 $ 2,334 $ 2,681

Total Revenues $ 3,685 $ 261 $ 4,954 $ 5,744

Product Lines:

Drilling and Evaluation

Well Construction

Revenues by Geographic Regions

Revenue by geographic area is summarized below.

Revenues from customers in Ireland were nil in each of the years presented.

Successor Predecessor

Period From Period From

12/14/2019 1/1/2019

Year Ended through through Year Ended

(Dollars in millions) 12/31/2020 12/31/2019 12/13/2019 12/31/2018

Geographic Areas:

Revenue by Geographic Areas:

North America $ 889 $ 68 $ 1,548 $ 1,987

5 unchanged sentences

Total Revenues $ 3,685 $ 261 $ 4,954 $ 5,744

Total revenues in the United States, part of our Western Hemisphere segment, were $ 59 million in the Successor Period and $ 1.3 billion in the Predecessor Period and $ 1.6 billion and $ 1.6 billion for the years ended December 31, 2018 and 2017, respectively.

Contract Balances

The following table provides information about receivables for product and services included in “Accounts Receivable, Net” at December 31, 2019 and 2018, respectively:

(Dollars in millions)

December 31, 2019

December 31, 2018

Receivables for Product and Services in Accounts Receivable, Net

Weatherford International plc – 2020 Form 10-K | 93

Table of Contents Item 8 | Notes to the Consolidated Financial Statements

Significant changes in the contract assets and liabilities balances during the period are as follows:

Contract Balances

The following table provides information about receivables for product and services included in “Accounts Receivable, Net,” “Contract Assets” and “Contract Liabilities” on our Consolidated Balance Sheets at December 31, 2020 and December 31, 2019.

(Dollars in millions) 12/31/2020 12/31/2019

Contract Assets

Contract Liabilities

Balance at December 31, 2018 (Predecessor)

Revenue recognized that was included in the deferred revenue balance at the beginning of the

Increase due to cash received, net of amount recognized as revenue during the period

Increase due to revenue recognized during the period but contingent on future performance

Transferred to receivables from contract assets recognized at the beginning of the period

Transferred to receivables from contract assets recognized during the period

Adjustments due to changes in estimates or contract modifications

Adjustments due to Fresh Start Accounting

Balance at December 13, 2019 (Successor)

Increase due to cash received, net of amount recognized as revenue during the period

Balance at December 31, 2019 (Successor)

Receivables for Product and Services in Accounts Receivable, Net $ 792 $ 1,156

Receivables for Equipment Rentals in Account Receivable, Net $ 34 $ 85

Contract Assets included in Other Current Assets $ 7 $ 3

Contract Liabilities included in Other Current Liabilities $ 37 $ 12

Revenue recognized for the year ended December 31, 2020 and 2019 that were included in the contract liabilities balance at the beginning of each year was $ 10 million and $ 61 million, respectively.

The increase in contract liabilities was due to advance payments on new or amended contract awards.

Included in the activity for 2019 was a fresh start adjustment of $ 29 million, which reduced contract liabilities.

Performance Obligations

1 unchanged sentence

A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.

In the following table, estimated revenue expected to be recognized in the future related to performance obligations that are either unsatisfied or partially unsatisfied as of December 31, 2019 primarily relate to subsea services and an artificial lift contract.

All consideration from contracts with customers is included in the amounts presented below.

(Dollars in millions)

(Dollars in millions) 2021 2022 2023 2024 Thereafter Total

Service revenue $ 32 $ 37 $ 39 $ 40 $ 54 $ 202

Venezuela Revenue Recognition

In the second quarter of 2017, we changed the accounting for revenue with our primary customer in Venezuela to record a discount reflecting the time value of money and accrete the discount as interest income over the expected collection period using the effective interest method.

In the fourth quarter of 2017, we changed the accounting for revenue with substantially all of our customers in Venezuela due to the downgrade of the country’s bonds by certain credit agencies, continued significant political and economic turmoil and continued economic sanctions around certain financing transactions imposed by the U.S.

In connection with this development, we recorded a charge of $ 230 million to fully reserve our receivables for these customers in Venezuela.

We continue to monitor our Venezuelan operations and will actively pursue the collection of our outstanding invoices.

During 2018, we collected $ 16 million on previously fully reserved accounts receivable.

Weatherford International plc – 2020 Form 10-K | 94

5 unchanged sentences

Research and development expenses are included in the results of our Western and Eastern Hemisphere segments.

Our corporate and other expenses that do not individually meet the criteria for segment reporting are reported separately on the caption Corporate General and Administrative.

Our corporate and other expenses that do not individually meet the criteria for segment reporting are reported separately on the caption Corporate.

Financial information by segment is summarized below.

Revenues are attributable to countries based on the ultimate destination of the sale of products or performance of services.

The accounting policies of the segments are the same as those described in “ Note 1 – Summary of Significant Accounting Policies .” Excluded from capital expenditures in the tables below is the capital expenditures related to the acquisition of assets held for sale.

Period From December 14 through December 31, 2019

Revenues are attributable to countries based on the ultimate destination of the sale of products or performance of services and was further described in “Note 23 – Revenues.” The accounting policies of the segments are the same as those described in “Note 1 – Summary of Significant Accounting Policies.”

Successor Predecessor

Period From Period From

12/14/2019 1/1/2019

Year Ended through through Year Ended

(Dollars in millions) 12/31/2020

Income (Loss)

12/31/2019 12/13/2019 12/31/2018

Western Hemisphere $ 1,586 $ 121 $ 2,620 $ 3,063

Eastern Hemisphere 2,099 140 $ 2,334 $ 2,681

Corporate General and Administrative

Period From January 1, 2019 to December 13, 2019

(Dollars in millions)

Income (Loss)

Total Revenue $ 3,685 $ 261 $ 4,954 $ 5,744

Operating Income (Loss):

Western Hemisphere $ 18 $ ( 4 ) $ 54 $ 208

Eastern Hemisphere 37 10 134 119

Corporate General and Administrative

Goodwill Impairment (a)

Prepetition Charges (b)

Long-live Asset Impairments, Asset Write-Downs, Inventory Write-Downs and Other (c)

Restructuring Charges (d)

Total Segment Operating Income $ 55 $ 6 $ 188 $ 327

Corporate ( 111 ) ( 5 ) ( 118 ) ( 130 )

Impairments and Other Charges (a)

( 1,236 ) — ( 1,104 ) ( 2,155 )

Restructuring Charges (b)

( 206 ) — ( 189 ) ( 126 )

Prepetition Charges (c)

Gain on Operational Assets Sale 12 — 15 —

Gain on Sale of Businesses, Net (e)

Impairment of the remaining goodwill related to our reporting units.

Prepetition charges for professional and other fees related to the Cases.

Includes asset write-downs, inventory write-downs and other charges, partially offset by a reduction of a contingency reserve on a legacy contract.

Weatherford International plc – 2019 Form 10-K | 116

Table of Contents Item 8 | Notes to the Consolidated Financial Statements

Includes restructuring charges of $ 189 million :

$ 84 million in Western Hemisphere, $ 50 million in Eastern Hemisphere and $ 55 million in Corporate.

Primarily includes the gain on sale of our laboratory services business.

Year Ended December 31, 2018

(Dollars in millions)

Income (Loss) from

Gain on Sale of Businesses, Net (d)

Total Operating Income (Loss) $ ( 1,486 ) $ 1 $ ( 1,182 ) $ ( 2,084 )

Interest Expense, Net ( 266 ) ( 12 ) ( 362 ) ( 614 )

Reorganization Items (c)

( 9 ) ( 4 ) 5,389 —

Other Expense, Net ( 53 ) — ( 26 ) ( 59 )

Income (Loss) Before Income Taxes $ ( 1,814 ) $ ( 15 ) $ 3,819 $ ( 2,757 )

Depreciation and Amortization:

Western Hemisphere $ 134 $ 14 $ 171 $ 216

Eastern Hemisphere 369 20 269 333

Corporate General and Administrative

Goodwill Impairment (f)

Long-Lived Asset Impairments, Asset Write-Downs and Other Charges (g)

Restructuring Charges (h)

Goodwill impairment of $ 1.9 billion was taken during the fourth quarter of 2018.

During 2018, impairments, asset write-downs and other includes $ 151 million in long-lived asset impairments primarily related to the land drilling rigs business and $ 87 million of other asset write-downs, charges and credits.

Includes restructuring charges of $ 126 million :

$ 27 million in the Western Hemisphere, $ 45 million in the Eastern Hemisphere and $ 54 million in Corporate.

Year Ended December 31, 2017

Corporate — — 7 7

Total $ 503 $ 34 $ 447 $ 556

(a) See “Note 4 – Impairments and Other Charges”, “Note 10 – Long-Lived Asset Impairments” and “Note 11 – Goodwill and Intangible Assets” for additional information.

(b) See “Note 12 – Restructuring Charges” for additional information.

Weatherford International plc – 2020 Form 10-K | 95

Table of Contents Item 8 | Notes to the Consolidated Financial Statements

(d) Primarily includes the gain on sale of our reservoir solutions business.

See “Note 8 – Business Combinations and Divestitures” for additional information.

Successor Predecessor

Period From Period From

Year 12/14/2019 1/1/2019 Year

Ended through through Ended

(Dollars in millions) 12/31/2020 12/31/2019 12/13/2019 12/31/2018

Income (Loss)

Capital Expenditures:

Western Hemisphere $ 79 $ 9 $ 113 $ 81

Eastern Hemisphere 59 7 115 87

Corporate General and Administrative

Long-Lived Asset Impairments, Write-Downs and Other Related Charges (i)

Restructuring Charges (j)

Litigation Charges

Loss on Sale of Businesses, Net (k)

During 2017, impairments, asset write-downs and other include $ 928 million in long-lived asset impairments (of which $ 740 million relates to the write-down to the lower of carrying amount or fair value less cost to sell of our land drilling rigs assets classified as held for sale), $ 506 million of asset write-downs, charges and credits and $ 230 million in the write-down of Venezuelan receivables.

Includes restructuring charges of $ 183 million :

$ 70 million in the Western Hemisphere, $ 77 million in the Eastern Hemisphere and $ 36 million in Corporate.

In the fourth quarter of 2017, we recognized a gain on the disposition of our U.S.

pressure pumping and pump-down perforating assets.

Weatherford International plc – 2019 Form 10-K | 117

Table of Contents Item 8 | Notes to the Consolidated Financial Statements

The following table presents total assets by segment at December 31:

Corporate 16 4 22 18

Total $ 154 $ 20 $ 250 $ 186

The following table presents total assets by segment:

(Dollars in millions) 2020 2019

1 unchanged sentence

Eastern Hemisphere 3,089 4,392

Total assets in the United States, part of our Western Hemisphere segment, were $ 1.2 billion and $ 1.6 billion as of December 31, 2019 and 2018 , respectively.

Revenues Percentages by Product Lines

We provide equipment and services used in the production, completions, drilling and evaluation, and well construction of oil and natural gas wells.

The composition of our consolidated revenues by product line are as follows:

Drilling and Evaluation

Well Construction

Long-lived Assets by Geo gra phic Areas

Long-lived assets by geographic area within the segments are summarized below.

Long-lived assets in Ireland were nil in each of the years presented.

Long-lived assets exclude goodwill and intangible assets as well as deferred tax assets of $ 39 million and $ 35 million at December 31, 2019 and 2018 , respectively.

Corporate 709 387

Total $ 5,434 $ 7,293

Long-lived Assets by Geographic Areas

Long-lived assets by geographic area within the segments are summarized below and exclude goodwill and intangible assets (see “Note 11 – Goodwill and Intangible Assets” for additional details) as well as deferred tax assets of $ 15 million and $ 39 million at December 31, 2020 and December 31, 2019, respectively.

Long-lived assets were zero in our country of domicile (Ireland) and in the U.S.

were $ 306 million and $ 532 million as of December 31, 2020 and December 31, 2019, respectively.

(Dollars in millions) 2020 2019

5 unchanged sentences

Eastern Hemisphere $ 826 $ 1,399

Weatherford International plc – 2019 Form 10-K | 118

Table of Contents Item 8 | Notes to the Consolidated Financial Statements

Quarterly Financial Data (Unaudited)

Summarized quarterly financial data for the Successor and Predecessor Periods and for the year ended December 31, 2018 are presented in the following tables.

In the following tables, the sum of “Basic and Diluted Loss Per Share” for the four quarters may differ from the annual amounts due to the required method of computing weighted average number of shares in the respective periods.

Additionally, due to the effect of rounding, the sum of the individual quarterly earnings per share amounts may not equal the calculated year earnings per share amount.

(Dollars in millions, except

per share amounts)

Net Income (Loss) Attributable to Weatherford

Basic and Diluted Income (Loss) Per Share

Includes charges of $ 298 million primarily related to goodwill impairment of $ 229 million , as well as $ 69 million primarily related to long-lived asset impairments, asset write-downs and inventory charges, restructuring and transformation charges and prepetition charges.

Includes charges of $ 125 million primarily related to goodwill impairment of $ 102 million and prepetition charges of $ 76 million , as well as $ 61 million primarily related to restructuring, transformation and asset write-downs charges, partially offset by gains on sales of businesses of $ 114 million .

Includes charges of $ 487 million primarily related to goodwill impairment of $ 399 million , restructuring and transformation charges and asset write-downs and inventory charges.

We also incurred reorganization charges of $ 303 million related to our bankruptcy Plan.

Includes reorganization gains of $ 5.7 billion related to our emergence from bankruptcy and Fresh Start Accounting.

Includes charges of $ 342 million primarily related to restructuring and transformation charges and asset write-downs and inventory charges.

2018 Quarters

(Dollars in millions, except per share amounts)

Net Loss Attributable to Weatherford

Basic and Diluted Loss Per Share

Includes charges of $ 57 million primarily related to a bond tender and call premium, restructuring and transformation charges, currency devaluation charges, asset write-downs and inventory charges, offset by gains on purchase of the remaining interest in a joint venture and a warrant fair value adjustment.

Includes credits of $ 109 million primarily related to restructuring and transformation charges, currency devaluation charges, long-lived asset impairments, other asset write-downs, offset by gains on property sales and a reduction of a contingency reserve on a legacy contract and a warrant fair value adjustment.

Includes charges of $ 95 million primarily related to restructuring and transformation charges, currency devaluation charges, long-lived asset impairments and deferred mobilization costs and other assets of the land drilling rigs business, offset by a gain on a warrant fair value adjustment.

Includes charges of $ 2.0 billion primarily related to goodwill impairment of $ 1.9 billion .

Total $ 1,435 $ 2,448

Weatherford International plc – 2020 Form 10-K | 96

2 unchanged sentences

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 8. Financial Statements and Supplementary Data