What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-05-06 compared with 2020-11-04 · 166 added, 217 removed, 103 unchanged (79% of the section changed)

5 unchanged sentences

For information about these assumptions, please review the section entitled “Forward-Looking Statements” and the section entitled “Part II – Other Information – Item 1A.

– Risk Factors.” As described in “Note 1 – General” references to “Successor” herein relate to the Condensed Consolidated Balance Sheets of the reorganized Company as of September 30, 2020 and December 31, 2019 and the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2020 (“Successor Period”) and are not comparable to the Condensed Consolidated Financial Statements of the Predecessor Periods for the three and nine months ended September 30, 2019 (“Predecessor Period”), as indicated by the “black line” division in the financials and footnote tables, which emphasizes the lack of comparability between amounts presented.

We conduct operations in approximately 80 countries and have service and sales locations in oil and natural gas producing regions globally.

– Risk Factors.”

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

Our operational performance is reviewed on a geographic basis, and we report the Western Hemisphere and Eastern Hemisphere as separate, distinct reporting segments.

Our principal business is to provide equipment and services to the oil and natural gas exploration and production industry, both onshore and offshore.

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.

Our two primary product lines are as follows:

(1) Production and Completions and (2) Drilling, Evaluation and Intervention.

Our new combined Production and Completion product line was previously reported as two separate product lines.

Our new Drilling, Evaluation and Intervention product line was previously reported as two separate product lines of Drilling and Evaluation and Well Construction.

• Production and Completions offers production optimization services and a complete production ecosystem, featuring our artificial-lift portfolio, testing and flow-measurement solutions, and optimization software, to boost productivity and profitability.

Our two product lines are as follows:

(1) Completion and Production and (2) Drilling, Evaluation and Intervention.

• Completion and Production (“C&P”) offers production optimization services and a complete production ecosystem, featuring our artificial-lift portfolio, testing and flow-measurement solutions, and optimization software, to boost productivity and profitability.

In addition, we have a suite of modern completion products, reservoir stimulation designs, and engineering capabilities that isolate zones and unlock reserves in deepwater, unconventional, and aging reservoirs.

• Drilling, Evaluation and Intervention comprises a suite of services ranging from early well planning to reservoir management.

• Drilling, Evaluation and Intervention (“DEI”) comprises a suite of services ranging from early well planning to reservoir management.

The drilling services offer innovative tools and expert engineering to increase efficiency and maximize reservoir exposure.

3 unchanged sentences

Our skilled fishing and re-entry teams execute under any contingency from drilling to abandonment, and our drilling tools provide reliable pressure control even in extreme wellbores.

The COVID-19 pandemic, customer activity shutdowns, travel constraints and access restrictions to customer work locations continue to cause significant uncertainty for the global economy, resulting in the continued significant decline in the global demand for oil and gas.

This continues to cause an imbalance in the supply and demand for oil and gas.

The impacts of the COVID-19 pandemic together with uncertainty around the extent and timing for an economic recovery, have caused extreme market volatility of commodity prices and resulted in significant reductions to the capital spending of exploration and production companies and lowering expectations of oil and gas related spending throughout the remainder of 2020 and beyond.

This has resulted in significant corresponding uncertainty for the trajectory of the oil and gas industry and the Company.

In addition, we expect the risk of a reinstatement of COVID-19 related restrictions or lockdowns to remain high, which creates further uncertainty in the global economic outlook and impact on oil and gas markets.

The Company continues to closely monitor the global impacts surrounding the COVID-19 pandemic, including operational and manufacturing disruptions, logistical constraints and travel restrictions.

These factors have negatively impacted our ability to operate and we expect these negative impacts to continue.

We have experienced and expect to continue to experience delays or a lack of availability of key components from our suppliers, shipping and other logistical delays and disruptions, customer restrictions that prevent access to their sites, community measures to contain the spread of the virus, and changes to Weatherford’s policies that have both restricted and changed the way our employees work.

We expect most, if not all, of these disruptions and constraints to have lasting effects on how we and our customers and suppliers work in the future.

We continuously improve crew rotations and management practices to minimize our employees’ exposure to COVID-19 while at client facilities.

In addition, our identification and management of COVID-19 cases continues to improve with advanced testing and response procedures.

Faced with these challenges, we have evolved our digital portfolio and enhanced our applications to offer fully integrated digital oilfield solutions.

We have increased our offerings of automated well construction and remote monitoring and predictive analytics related to our production offerings.

Revenue in the Successor third quarter of 2020 declined 39% compared to the Predecessor third quarter of 2019 and declined 28% year over year due to lower business activity resulting from the factors described above.

Demand for our products and services has weakened and we continue to expect lower than normal demand for our products and services through the remainder of 2020 and into 2021.

As a result, our financial outlook for the remainder of the year continues to be materially and negatively impacted.

We continue to anticipate significant constraints on our ability to generate and grow our revenues, profits and cash flows.

We anticipate a multi-year dislocation across the industry, particularly in North America, Europe, Latin America and Sub Saharan Africa.

We have implemented a number of aggressive actions to right-size our business to address current market conditions, including:

• Temporary pay reductions of 20% for management and to our Board of Directors’ annual cash retainer;

• Total headcount reductions across North American and International operations, as well as the global support structure consistent with the decline in business activity;

• Furloughs and pay reductions for remaining employees in the United States and selected international locations;

• Reducing planned capital expenditures by approximately 50% in 2020 versus 2019 levels;

• Further consolidating geographic and product line structures to better align with market conditions.

Many of the cost reduction initiatives listed above, like temporary pay reductions and headcount reductions, have been extended through the fourth quarter of 2020.

At September 30, 2020, we had sufficient liquidity to operate our business.

However, our rapidly changing operating environment has led to an inability to predict the ultimate length and depth of the adverse economic impact from the COVID-19 pandemic and the uncertainty in the global oil markets.

The impact on our Company has been, and is expected to continue to be, significant.

Financial Results and Overview

Revenues totaled $832 million in the three months ended March 31, 2021, a decrease of $383 million, or 32%, compared to the three months ended March 31, 2020.

This was primarily a result of a decline in demand for services and products related to the global health and economic crisis related to the COVID-19 pandemic, which began negatively impacting our business and industry late in the first quarter of 2020.

Our revenue decline was predominantly driven by lower activity levels across both our C&P and DEI product lines.

Revenues decreased 1% sequentially, with 6% decline in the Eastern Hemisphere driven by lower activity levels across both our C&P and DEI product lines, offset by 5% growth in the Western Hemisphere due to increased DEI sales and seasonally higher activity in North America.

Consolidated operating results in the three months ended March 31, 2021, improved $809 million, or 98%, compared to the three months ended March 31, 2020, and improved 88% sequentially, primarily from lower impairment and restructuring charges and a decline in our research and development expense reflecting the cost improvement initiatives that were implemented during 2020.

These cost improvements were partially offset by the decline in demand for our products and services due to the COVID-19 pandemic.

Segment operating income in the three months ended March 31, 2021 was $5 million , a decrease of $42 million compared to the three months ended March 31, 2020.

The decrease was driven by the decline in demand for services across both our C&P and DEI product lines.

Segment operating income decreased $8 million sequentially, driven by the lower activity levels in C&P and DEI in the Eastern Hemisphere offset by increased activity and operating improvements in the Western Hemisphere.

Significant Impairments and Other Charges

For the three months ended March 31, 2021, we did not have significant impairments and other charges.

For the three months ended March 31, 2020, significant impairments and other charges totaled $843 million and included $640 million of long-lived asset impairments, $167 million of goodwill impairment, $26 million of restructuring charges and $10 million of other charges.

Exchange Listing

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 list on the NYSE or National Association of Securities Dealers Automated Quotations (“NASDAQ”) 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.

We continue to trade on the OTC Pink Marketplace under the ticker symbol “WFTLF”.

Opportunities and Challenges

As production decline rates persist and reservoir productivity complexities increase, our customers continue to face challenges in balancing the cost of extraction activities with securing desired rates of production while achieving acceptable rates of return on investment.

These challenges increase our customers’ requirements for technologies that improve productivity and efficiency, which in turn puts pressure on us to deliver our products and services at competitive rates.

We believe we are well positioned to satisfy our customers’ needs, but the level of improvement in our businesses in the future will depend heavily on pricing, volume of work, and our ability to offer solutions to more efficiently extract oil and gas, control costs, and penetrate new and existing markets with our newly developed technologies.

Over the long-term, we expect the world’s demand for energy will rise from current levels requiring increased oil field services and more advanced technology from the oilfield

service industry.

We remain focused on delivering innovative and cost-efficient solutions for customers to assist them in achieving their operational, safety and environmental objectives.

Our challenges also include adverse market conditions that could make our targeted cost reduction benefits more difficult to obtain and the ability to recruit and retain employees problematic.

The imbalance between supply and demand for oil created by the simultaneous impact of the COVID-19 pandemic, together with uncertainty around the extent and timing for an economic recovery, have caused extreme market volatility and resulted in a decline in commodity prices since the beginning of 2020 and resulted in significant reductions to the capital spending plans of exploration and production companies.

In addition, continued negative sentiment for the energy industry in the capital markets has impacted, and may continue to impact, demand for our products and services, as our customers, particularly those in North America, have experienced and likely will continue to experience challenges securing appropriate amounts of capital under suitable terms to finance their operations.

The cyclicality of the energy industry and the COVID-19 pandemic continues to impact the demand for our products and services, such as our drilling and evaluation services, well construction and well completion services, which strongly depend on the level of exploration and development activity and the completion phase of the well life cycle.

Other products and services, such as our production optimization and artificial lift systems, are dependent on the number of wells and the type of production systems used.

We are following our long-term strategy aimed at achieving profitability in our businesses, servicing our customers, right-sizing our business and creating value for our stakeholders.

Our long-term success will be determined by our ability to manage effectively the cyclicality of our industry, including the ongoing and prolonged industry downturn, our ability to respond to industry demands and periods of over-supply or uncertain oil prices, and ultimately to generate consistent positive cash flow and positive returns on the invested capital.

In March 2021, we filed a Form 10 Registration Statement (“Form 10”) with the United States Securities and Exchange Commission (“SEC”) to register our ordinary shares pursuant to Section 12(b) of the Securities Exchange Act of 1934 (as amended, the “Exchange Act”), with no additional shares to be offered for sale.

The Company’s voluntary filing of the Form 10 is subject to SEC review and, upon its effectiveness, we will be subject to the reporting requirements of the Exchange Act.

In conjunction with the Form 10 becoming effective, we have applied to list our ordinary shares on The Nasdaq Stock Market LLC stock exchange (“Nasdaq”) under the ticker symbol “WFRD”, subject to approval from Nasdaq and the Company’s compliance with the applicable listing requirements.

We currently expect that the registration and listing process will be completed during the second quarter of 2021.

Industry Trends

3 unchanged sentences

The following charts set forth certain statistics that reflect historical market conditions.

The table below shows the average oil and natural gas prices for West Texas Intermediate (“WTI”) and Henry Hub natural gas during the three and nine months ended September 30, 2020 and 2019.

Commodity prices decreased during 2020 following the dual impact of the COVID-19 pandemic and the inability of Organization of Petroleum Exporting Countries (“OPEC”) and other high oil exporting non-OPEC nations (“OPEC+”) to agree on production cuts.

Three Months Ended Nine Months Ended

The table below shows the average oil (West Texas Intermediate (“WTI”)) and natural gas (Henry Hub) prices during the three months ended March 31, 2021 and 2020.

Three Months Ended

3/31/2021 3/31/2020

2 unchanged sentences

Natural gas price - Henry Hub (2)

$2.00 $2.33 $1.87 $2.56

(1) Oil price measured in dollars per barrel (rounded to the nearest dollar)

1 unchanged sentence

The historical average rig counts based on the weekly Baker Hughes Company rig count information were as follows:

Three Months Ended Nine Months Ended

Three Months Ended

3/31/2021 12/31/2020 3/31/2020

2 unchanged sentences

Worldwide 1,236 1,062 2,055

As of September 30, 2020, the North American and International Rig Count totaled 332 and 702, respectively.

Factors influencing oil and natural gas prices during the period include the imbalance between supply and demand for oil created by the simultaneous impact of the COVID-19 pandemic and actions by certain OPEC+ nations, the uncertainty around the extent and timing for an economic recovery and global market volatility.

These factors contributed to the resulting precipitous decline in commodity prices, rising oil and gas inventory levels, decreased realized and expected levels of oil and gas demand, decreased level of production capacity and geopolitical uncertainty.

While OPEC+ agreed in April to cut production, downward pressure on commodity prices has continued and could continue for the foreseeable future, particularly given concerns over available storage capacity.

Financial Results and Overview

Successor revenues totaled $807 million in the third quarter ended September 30, 2020 and $2.8 billion in the Successor nine months ended September 30, 2020.

This is a decrease of $507 million, or 39%, and $1.1 billion, or 28%, compared to the Predecessor revenues in the third quarter and nine months ended September 30, 2019, respectively, as the unprecedented global health and economic crisis sparked by the COVID-19 pandemic continued to negatively impact industry activity during the third quarter ended September 30, 2020.

Our revenue decline was predominantly driven by lower activity levels in North America and lower demand for services in the United States, but was also impacted by declines in activity internationally, primarily in Latin America, Middle East, North Africa and Russia.

Successor consolidated operating results improved $387 million in the Successor third quarter ended September 30, 2020 and decreased $513 million in the Successor nine months ended September 30, 2020 compared to the Predecessor consolidated operating results in the third quarter and nine months ended September 30, 2019.

The improved operating results in the Successor third quarter ended September 30, 2020 primarily reflects lower impairment charges, lower retention expenses and improvements in our organizational structure, partially offset by the decline in demand due to the COVID-19 pandemic.

Included in the Successor and Predecessor third quarter is a gain on sale of operational assets.

The decline in operating results for the nine months ended September 30, 2020 primarily reflects the decline in demand due to COVID-19 pandemic, long-lived asset impairment charges, goodwill impairment, and inventory charges, partially offset by the lower retention expenses and improvements in our organizational structure.

Successor segment operating income was $3 million in the third quarter ended September 30, 2020 and $42 million in the nine months ended September 30, 2020, a decrease of $68 million and $97 million, respectively, compared to the Predecessor segment operating income in the third quarter and nine months ended September 30, 2019.

The decrease was driven by the decline in demand for services related to COVID-19 pandemic, partially offset by our lower cost structure.

Significant Operating Charges

For the Successor three months ended September 30, 2020, significant charges incurred totaled $47 million of restructuring, severance and other operating charges.

For the Predecessor three months ended September 30, 2019, significant charges incurred totaled $494 million and included $399 million goodwill impairment, $53 million of restructuring charges and $42 million of other operating charges.

For the Successor nine months ended September 30, 2020, significant charges incurred totaled $1.35 billion and included $818 million related to long-lived asset impairments, $239 million of goodwill impairments, $134 million for inventory charges, and $162 million of restructuring, severance and other charges.

For the Predecessor nine months ended September 30, 2019, significant charges incurred totaled $1.03 billion and included $730 million goodwill impairment, $86 million of prepetition charges, $93 million of restructuring charges and $120 million of other operating charges.

Global demand for oil was lower in the first quarter of 2021 compared to the first quarter of 2020, as the COVID-19 pandemic which began late in the first quarter of 2020, remains ongoing.

Beginning in the first quarter of 2020, governments around the world responded to the COVID-19 pandemic with lockdowns, resulting in significantly reduced travel.

Global stocks of crude and refined products increased as oil supply could not respond quickly enough to balance the market.

These factors contributed to the resulting precipitous decline in commodity prices through the remainder of 2020, rising oil and gas inventory levels, decreased realized and expected levels of oil and gas demand, decreased level of production capacity and geopolitical uncertainty.

During the second half of 2020, the Organization of Petroleum Exporting Countries (“OPEC”) led a supply alliance that agreed to production limits, which stabilized and improved oil prices.

During the three months ended March 31, 2021, oil and natural gas prices have improved and with less volatility compared to prior year, however rig counts remain approximately 40% lower than the same period in the prior year as our industry adjusted operational structure in the last year in response to lower demand.

Business Outlook

The COVID-19 pandemic, customer activity shutdowns, travel constraints and access restrictions to customer work locations continue to cause significant uncertainty for the global economy, resulting in the decline in the global demand for oil and gas in the first quarter of 2021 compared to the first quarter of 2020.

We continue to closely monitor the global impacts surrounding the COVID-19 pandemic, including operational and manufacturing disruptions, logistical constraints and travel restrictions.

We expect most, if not all, of these disruptions and constraints will continue to affect how we and our customers and suppliers work.

We continuously improve crew rotations and management practices to minimize our employees’ exposure to COVID-19 while at client facilities.

Our identification and management of COVID-19 cases evolve with the latest guidance through the development of updated protocols, advanced testing and response procedures.

Faced with these challenges, we evolved our digital portfolio and enhanced our applications to offer fully-integrated digital oilfield solutions.

We also increased our offerings of automated well construction and remote monitoring and predictive analytics related to our product offerings.

Oil prices have risen recently, buoyed by recent supply policies led by OPEC and other high oil exporting non-OPEC nations (“OPEC+”).

We expect continued improvements in our customer activity levels with the ongoing COVID-19 vaccine rollout and multinational economic stimulus actions which is expected to provide a measured pathway to oil demand recovery throughout 2021.

We anticipate industry activity will continue to slowly recover in the second half of 2021, with higher activity levels more likely to occur during 2022.

We expect our consolidated revenues in 2021 to align with current activity levels and are expected to be in line with our annualized second-half 2020 results.

This is expected to be comprised of growth in the Western Hemisphere of low- to mid-single digits, and contraction in the low-single digits in the Eastern Hemisphere.

The oilfield services industry growth is highly dependent on many external factors, such as the global response to the COVID-19 pandemic, our customers’ capital expenditures, world economic and political conditions, the price of oil and natural gas, member-country quota compliance within the OPEC, weather conditions and other factors.

Opportunities and Challenges

In addition, as consolidation of the oil and gas services industry continues due to market conditions, there has been an increased demand for companies with specialized products, services and technologies.

Over the long-term, we expect the world’s demand for energy will rise from current levels requiring increased oil field services and more advanced technology from the oilfield service industry.

We remain focused on delivering innovative and cost-efficient solutions for customers to assist them in achieving their operational, safety and environmental objectives.

Our challenges also include adverse market conditions that could make our targeted cost reduction benefits more difficult to recruit new and retain existing employees.

Increasing investor and government focus on environmental and social governance factors can impact demand for our products and services.

The cyclicality of the energy industry and the pandemic continues to impact the demand for our products and services which strongly depend on the level of exploration and development activity and the completion phase of the well life cycle or on the number of wells and the type of production systems used.

We are following our long-term strategy aimed at achieving profitability in our businesses, servicing our customers and creating value for our shareholders.

Our long-term success will be determined by our ability to manage effectively the cyclicality of our industry, including potential prolonged industry downturns, our ability to respond to industry demands and periods of over-supply or uncertain oil prices, and ultimately to generate consistent positive cash flow and positive returns on the invested capital.

Results of Operations

The following table sets forth consolidated results of operations and financial information by operating segment and other selected information for the periods indicated.

The Successor Period and the Predecessor Period are distinct reporting periods as a result of our emergence from bankruptcy on December 13, 2019.

Successor Predecessor

Three Months Ended Three Months Ended Favorable

(Dollars and shares in millions, except per share data) 9/30/2020 9/30/2019 (Unfavorable) % Change

Western Hemisphere $ 316 $ 675 $ (359) (53) %

Eastern Hemisphere 491 639 (148) (23) %

Total Revenues 807 1,314 (507) (39) %

Operating Income (Loss):

Western Hemisphere (2) 15 (17) (113) %

Eastern Hemisphere 5 56 (51) (91) %

Total Segment Operating Income (Loss) 3 71 (68) (96) %

Corporate General and Administrative (28) (31) 3 10 %

Impairments and Other Charges (47) (494) 447 90 %

Gain on Operational Assets Sale 12 15 (3) (20) %

Loss Sale of Businesses, Net — (8) 8 100 %

Total Operating Loss (60) (447) 387 87 %

Interest Expense, Net (79) (26) (53) (204) %

Reorganization Items — (303) 303 100 %

Other Expense, Net (20) (8) (12) (150) %

Loss Before Income Taxes (159) (784) 625 80 %

Income Tax Provision (8) (31) 23 74 %

Net Loss (167) (815) 648 80 %

Successor Predecessor

Nine Months Ended Nine Months Ended

(Dollars and shares in millions, except per share data) 9/30/2020 9/30/2019 Favorable (Unfavorable) Percentage Change

Favorable (Unfavorable)

Three Months Ended Seq YoY

(Dollars and shares in millions, except per share data) 03/31/21 12/31/20 03/31/20 % Change % Change

Western Hemisphere $ 390 $ 372 $ 588 5 % (34) %

5 unchanged sentences

Total Segment Operating Income 5 13 47 (62) % (89) %

Corporate General and Administrative (80) (95) 15 16 %

Corporate (18) (31) (26) 42 % 31 %

Total Operating Income Before Impairments, Restructuring and Other Charges (13) (18) 21 28 % (162) %

Impairments and Other Charges — 3 (817) 100 % 100 %

Gain on Operational Assets Sale 12 15 (3) (20) %

Gain on Sale of Businesses, Net — 104 (104) (100) %

Restructuring Charges — (92) (26) 100 % 100 %

Total Operating Loss (13) (107) (822) 88 % 98 %

5 unchanged sentences

Net Loss $ (110) $ (195) $ (958) 44 % 89 %

Segment Revenues

Western Hemisphere revenues decreased $359 million, or 53%, in the Successor third quarter ended September 30, 2020 and $906 million, or 43%, for the Successor nine months ended September 30, 2020 compared to the Predecessor third quarter and nine months ended September 30, 2019 as the unprecedented global health and economic crisis sparked by the COVID-19 pandemic negatively impacted industry activity.

The lower demand for oil and gas created by the impact of the COVID-19 pandemic, together with uncertainty around the extent and timing for an economic recovery, have caused significant reductions to the capital spending plans of exploration and production companies.

This resulted in lower activity levels in the U.S.

and Canada as a result of a decline in rig related activity and exploration spending, which has reduced demand for drilling, completion and production products and services.

We also experienced declines in Latin America with significant activity reductions in Argentina and Columbia due to the COVID-19 pandemic and lower demand for oil and gas.

Eastern Hemisphere revenues decreased $148 million, or 23%, in the Successor third quarter ended September 30, 2020 and $220 million, or 12%, for the Successor nine months ended September 30, 2020 compared to the Predecessor third quarter and nine months ended September 30, 2019 related to a decline in activity in the Middle East, North Africa, Asia and Russia due to COVID-19 pandemic.

Segment Operating Results

Successor segment operating income was $3 million in the third quarter ended September 30, 2020 and Successor segment operating income was $42 million for the nine months ended September 30, 2020, a decrease of $68 million and $97 million, respectively, compared to the Predecessor third quarter and nine months ended September 30, 2019.

The result was principally driven by the impact of the COVID-19 pandemic resulting in lower activity levels in North America as well as third quarter declines in activity internationally, primarily in Latin America, Middle East, North Africa and Russia.

Western Hemisphere Successor segment operating loss of $2 million in the third quarter ended September 30, 2020 and Successor segment operating income of $4 million for the nine months ended September 30, 2020, declined $17 million and $31 million, respectively, compared to the Predecessor third quarter and nine months ended September 30, 2019.

The segment income decline was impacted by lower activity levels in North America, Argentina and Colombia, the deterioration in demand for services due to the COVID-19 pandemic and weakening demand for oil and gas.

Eastern Hemisphere Successor segment operating income of $5 million in the third quarter ended September 30, 2020 and $38 million for the nine months ended September 30, 2020 was down by $51 million and $66 million, respectively, compared to the Predecessor third quarter and nine months ended September 30, 2019.

The segment income decline was impacted by slowing activity levels, deterioration in demand for services due to the COVID-19 pandemic and weakening demand for oil and gas, partially offset by improved margins on product sales in the Middle East, lower operational costs and reduced employee retention expenses.

Net Income Attributable to Noncontrolling Interests 6 5 8 (20) % 25 %

Net Loss Attributable to Weatherford $ (116) $ (200) $ (966) 42 % 88 %

Net Loss per Diluted Share $ (1.66) $ (2.87) $ (13.80) 42 % 88 %

Weighted Average Diluted Shares Outstanding 70 70 70 NA N/A

Depreciation and Amortization $ 111 $ 116 $ 157 4 % 29 %

Consolidated and Segment Revenues

Revenues totaled $832 million in the three months ended March 31, 2021.

This is a decrease of $383 million, or 32%, compared to revenues in the three months ended March 31, 2020 was primarily a result of a decline in demand for services and products related to the pandemic, which began negatively impacting our industry late in the first quarter of 2020.

The sequential consolidated revenue decline was 1%, with 6% decline in the Eastern Hemisphere driven by lower activity levels across both our C&P and DEI product lines offset by 5% growth in the Western Hemisphere due to increased DEI sales and seasonally higher activity.

Western Hemisphere revenues decreased $198 million, or 34%, for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 due to lower demand for service and product activity across both product lines as a result of the decrease in demand in services.

Western Hemisphere revenues increased 5% sequentially due to increased DEI sales and seasonally higher activity.

Eastern Hemisphere revenues decreased $185 million, or 30%, for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 related to a decline in activity resulting in lower service and product sales in both our C&P and DEI product lines.

Eastern Hemisphere revenues decreased 6% sequentially driven by lower activity levels across both our C&P and DEI product lines, partially offset by improved DEI sales in the Europe and the Middle East.

Consolidated and Segment Operating Results

Consolidated operating loss in the three months ended March 31, 2021, decreased $809 million, or 98%, compared to the three months ended March 31, 2020, and decreased 88% sequentially, primarily from lower impairment and restructuring charges and a decline in our research and development expense reflecting the cost improvement initiatives that were implemented during 2020.

These cost improvements were partially offset by the decline in demand for our products and services due to the COVID-19 pandemic.

Segment operating income in the three months ended March 31, 2021 was $5 million, a decrease of $42 million compared to the three months ended March 31, 2020.

The decrease was driven by the decline in demand for services across both our C&P and DEI product lines, partially offset by our lower cost structure.

Western Hemisphere segment operating income in the three months ended March 31, 2021of $24 million decreased $5 million compared to the three months ended March 31, 2020.

The decrease was impacted by adverse weather in the United States, lower activity levels in North America, and the decline in demand for services and oil and gas partially offset by improvements in C&P related activities in Latin America, lower operational and employee costs.

Western Hemisphere segment operating income improved $10 million sequentially due to increased DEI sales and seasonally higher activity.

Eastern Hemisphere segment operating loss of $19 million for the three months ended March 31, 2021 deteriorated by $37 million, compared to the three months ended March 31, 2020 and deteriorated by $18 million sequentially.

The deterioration was driven by driven by lower activity levels across both our C&P and DEI product lines, partially offset by lower operational and employee costs.

Interest Expense, Net

Successor interest expense was $79 million in the third quarter ended September 30, 2020 and $196 million for nine months ended September 30, 2020.

The Successor interest expense represents interest on our 11.0% Exit Notes due 2024 (“Exit Notes”) and our 8.75% Senior Secured Notes due 2024 (“Senior Secured Notes”) as well as the write-off of unamortized deferred issuance costs of $15 million associated with the termination of our senior secured lending agreement (“ABL Credit Agreement”).

See “Note 8 – Borrowings and Other Obligations” to the Condensed Consolidated Financial Statements for further details on the refinancing.

Predecessor interest expense was $26 million in the third quarter ended September 30, 2019 and $341 million for the nine months ended September 30, 2019.

Predecessor interest expense in the third quarter of 2019 is primarily related to the interest on our Debtor-in-Possession Credit Agreement (“DIP Credit Agreement”).

In the third quarter of 2019 the Predecessor had unrecognized contractual interest of $133 million (no longer accrued interest) on its unsecured senior notes and the unpaid balance was classified as liabilities subject to compromise.

In addition, the Predecessor discontinued the amortization of deferred financing and debt discounts as the unamortized balances were removed in the Predecessor third quarter and recorded as “Reorganization Items” on the Condensed Consolidated Statements of Operations.

Predecessor interest expense in the nine months ended September 30, 2019 primarily represented interest on Predecessor DIP Credit Agreement in the third quarter of 2019 and interest on the Predecessor senior notes and credit agreements for the first half of 2019.

Interest expense was $70 million for three months ended March 31, 2021.

The interest expense represents interest on our 11.0% Exit Notes due 2024 (“Exit Notes”) and our 8.75% Senior Secured Notes due 2024 (“Senior Secured Notes”) as well as accretion expense amortized on our deferred issuance costs and discount on our Senior Secured Notes.

Interest expense was $58 million for the three months ended March 31, 2020.

The interest expense represents interest on our Exit Notes.

See “Note 7 – Borrowings and Other Obligations” to the Condensed Consolidated Financial Statements for further details.

Reorganization Items

Predecessor expenses, gains and losses that are realized or incurred as of or subsequent to its petition date and as a direct result of the bankruptcy cases are recorded under “Reorganization Items” on our Condensed Consolidated Statements of Operations.

For the three and nine months ended September 30, 2019, Predecessor “Reorganization Items” were $303 million and comprised of $134 million of expense related to the write-off of deferred financing and debt discounts on liabilities subject to compromise that was previously being amortized over the life of the Predecessor senior notes, $81 million of backstop commitment fees, $56 million of debtor-in-possession financing fees, and $32 million of professional fees.

Other Income (Expense)

Successor other expense was $20 million in the third quarter ended September 30, 2020 and $56 million for the nine months ended September 30, 2020 compared to Predecessor other expense of $8 million in the third quarter ended September 30, 2019 and $18 million for the nine months ended September 30, 2019.

Other expense was primarily driven by foreign currency exchange losses of $13 million in the third quarter of 2020 and $38 million for the nine months ended September 30, 2020 related to currency losses in countries with no or limited markets to hedge.

The unfavorable change primarily relates to the weakening of foreign currencies following the onset of COVID-19 pandemic.

Other expense also includes letter of credit fees and other financing fees.

We have determined that because small changes in estimated ordinary annual income would result in significant changes in the estimated annual effective tax rate, the use of a discrete effective tax rate is appropriate for determining the quarterly provision for income taxes.

The discrete method treats the year-to-date period as if it was the annual period and determines the income tax expense or benefit on that basis.

Expenses, gains and losses that are realized or incurred as of or subsequent to the July 1, 2019 bankruptcy petition date and as a direct result of the bankruptcy cases and emergence from bankruptcy on December 13, 2019 were recorded under “Reorganization Items” on our Condensed Consolidated Statements of Operations.

For the three months ended March 31, 2021 and 2020 “Reorganization Items” were zero and $9 million, respectively.

Other Expense, Net

Other expense was $4 million for the three months ended March 31, 2021 compared to other expense of $25 million for the three months ended March 31, 2020.

Other expense is made up of letter of credit fees, other financing charges and foreign exchange losses, primarily attributed to currency losses in countries with no or limited markets to hedge.

The improvement was primarily due to lower currency volatility this quarter compared to the significant volatility in the same period of the prior year following the start of the COVID-19 pandemic.

We have determined that because small changes in estimated ordinary annual income would result in significant changes in the estimated annual effective tax rate, using the year-to-date effective tax rate is appropriate for determining the quarterly provision for income taxes.

The year-to-date effective tax rate treats the year-to-date period as if it was the annual period and determines the income tax expense or benefit on that basis.

We will continue to use this method each quarter until the annual effective tax rate method is deemed appropriate.

For the Successor three and nine months ended September 30, 2020, we recognized tax expense of $8 million and $64 million, respectively, on a loss before income taxes of $159 million and $1.6 billion, respectively, as compared to the Predecessor three and nine months ended September 30, 2019 where we recognized tax expense of $31 million and $76 million, respectively, on a loss before income taxes of $784 million and $1.5 billion, respectively.

Tax expense for the three and nine months ended September 30, 2020 and 2019 includes withholding taxes, minimum taxes and deemed profit taxes that do not directly correlate to ordinary income or loss.

Impairments and other charges did not result in significant tax benefit in either period.

Tax expense for the Successor nine months ended September 30, 2020 includes $20 million recorded in the first quarter of 2020 to recognize valuation allowance in jurisdictions where we are no longer able to forecast taxable income and a subsequent $11 million release to derecognize such valuation allowance in the current quarter where this was no longer applicable.

For the three months ended March 31, 2021, we recognized tax expense of $23 million on a loss before income taxes of $87 million compared to tax expense of $44 million on a loss before income taxes of $914 million for the three months ended March 31, 2020.

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 three months ended March 31, 2020 included $20 million to recognize valuation allowance in jurisdictions where we are no longer able to forecast taxable income as a result of our liquidity position as of March 31, 2020.

We routinely undergo tax examination in various jurisdictions.

We cannot predict the timing or outcome regarding resolution of these tax examinations or if they will have a material impact on our financial statements.

As of September 30, 2020, we anticipate that it is reasonably possible that our uncertain tax positions of $214 million may decrease by up to $2 million in the next twelve months due to expiration of statutes of limitations, settlements and/or conclusions of tax examinations.

As of March 31, 2021, we anticipate that it is reasonably possible that our uncertain tax positions of $233 million may decrease by up to $3 million in the next twelve months due to expiration of statutes of limitations, settlements and/or conclusions of tax examinations.

In response to the COVID-19 pandemic, many countries have enacted tax relief measures to provide aid and economic stimulus to companies impacted by the COVID-19 pandemic.

For the third quarter and nine months ended September 30, 2020, there were no material tax impacts to our financial statements as it relates to COVID-19 tax relief measures.

For the three months ended March 31, 2021, there were no material tax impacts to our Condensed Consolidated Financial Statements related to COVID-19 tax relief measures.

Restructuring, Facility Consolidation and Severance Charges

During the Successor three and nine months ended September 30, 2020, in response to the impact on our business from the COVID-19 pandemic and the significant decline in demand, we initiated additional immediate actions and developed plans to reduce our future cost structure as discussed previously under the “Outlook” subheading in “Item 2.

– Management’s Discussion and Analysis of Financial Condition and Results of Operations.” As a result, during the Successor three and nine months ended September 30, 2020, we incurred restructuring and severance charges of $31 million and $114 million, respectively.

Additional charges with respect to our ongoing cost reduction actions are expected to be recorded through the remainder of 2020 and could result in additional charges in future periods as we execute and revise our plans.

Please see “Note 6 – Restructuring, Facility Consolidation and Severance Charges” to our Condensed Consolidated Financial Statements for additional details of our charges by segment.

Liquidity and Capital Resources

On August 28, 2020, we completed a series of financing transactions that meaningfully enhanced our liquidity, including issuing $500 million of Senior Secured Notes, terminating our ABL Credit Agreement, and amending and increasing the size of our senior secured letter of credit agreement (the “LC Credit Agreement”) to $215 million.

The proceeds from our Senior Secured Notes, combined with the termination of our ABL Credit Agreement and the covenants under the ABL Credit Agreement, resulted in the alleviation of our substantial doubt to continue as a going concern that was previously reported at June 30, 2020.

See “Note 8 – Borrowings and Other Obligations” to the Condensed Consolidated Financial Statements for further details.

The effects of the COVID-19 pandemic have resulted in a significant and continued reduction in international and U.S.

economic activity.

The imbalance between supply and demand for oil created by the impact of the COVID-19 pandemic, together with uncertainty around the extent and timing for an economic recovery, have caused significant reductions to the capital spending plans of exploration and production companies.

This has resulted in weakened demand for our products and services throughout 2020, and caused significant volatility and disruption of the financial markets.

This period of extreme economic disruption, low oil prices and reduced demand for our products and services has had, and is likely to continue to have, a significantly negative impact on our business, results of operation and financial condition.

At September 30, 2020, we had total cash and cash equivalents and restricted cash of $1.3 billion of which $172 million was restricted cash, compared to total cash and cash equivalents and restricted cash of $800 million of which $182 million was restricted cash at December 31, 2019.

At September 30, 2020, we had available liquidity of $842 million as defined in our amended LC Credit Agreement and Senior Secured Notes.

The following table summarizes cash flows provided by (used in) each type of activity for the nine months ended September 30, 2020 and September 30, 2019:

Successor Predecessor

Nine Months Ended Nine Months Ended

At March 31, 2021, we had total cash and cash equivalents and restricted cash of $1.3 billion, which increased $58 million compared to the year ended December 31, 2020.

Included in total cash and cash equivalents was $166 million and $167 million of restricted cash at March 31, 2021 and December 31, 2020, respectively.

Restricted cash is primarily cash collateral for letters of credit not held under the senior secured letter of credit agreement.

The following table summarizes cash flows provided by (used in) each type of activity and a reconciliation of operating cash flow to non-GAAP free cash flow for the three months ended March 31, 2021 and March 31, 2020:

Three Months Ended March 31,

(Dollars in millions) 2021 2020

Net Cash Provided by (Used in) Operating Activities $ 188 $ (679)

Net Cash Provided by (Used in) Investing Activities (89) 210

Net Cash Provided by Financing Activities 400 917

Net Cash Provided by Operating Activities $ 74 $ 30

Net Cash Used in Investing Activities (3) (35)

Net Cash Used in Financing Activities (9) (20)

Reconciliation of Operating Cash Flow to Non-GAAP Free Cash Flow:

Net Cash Provided by Operating Activities $ 74 $ 30

Capital Expenditures for Property, Plant and Equipment (15) (38)

Proceeds from Disposition of Assets 11 6

Non-GAAP Free Cash Flow $ 70 $ (2)

Operating Activities

Cash provided by operating activities for the Successor was $188 million for the nine months ended September 30, 2020 compared to cash used in operating activities for the Predecessor of $679 million for the nine months ended September 30, 2019.

Cash provided by Successor operating activities for the nine months ended September 30, 2020 was driven by improved collections on our accounts receivables, lower payments for working capital activities, lower retention and performance cash bonuses and was partially offset by payments for interest.

Cash used in Predecessor operating activities for the nine months ended September 30, 2019 was driven by working capital needs, payments for interest, performance and retention bonuses, severance and other restructuring and transformation costs.

In the Predecessor nine months ended September 30, 2019, cash used in operating activities included payments for prepetition and “Reorganization Items” charges primarily for professional and other fees.

Cash provided by operating activities was $74 million for the three months ended March 31, 2021 compared to $30 million for the three months ended March 31, 2020.

The improvement for the three months ended March 31, 2021 was primarily driven by collections on our accounts receivables and inventory utilization, partially offset by higher interest payments.

Investing Activities

Cash used in investing activities for the Successor was $89 million for the nine months ended September 30, 2020 compared to cash provided by investing activities for the Predecessor of $210 million for the nine months ended September 30, 2019.

During the Successor nine months ended September 30, 2020, the primary uses of cash in investing activities were (i) capital expenditures of $100 million for property, plant and equipment and (ii) cash paid of $24 million related to a deferred payment for our 2018 acquisition of our Qatari joint venture.

During the Successor nine months ended September 30, 2020, the primary sources of cash from investing activities included $13 million from other asset dispositions and $25 million of cash proceeds from Angolan government bonds.

The amount we spend for capital expenditures varies each year and is based on the types of contracts into which we enter, our asset availability and our expectations with respect to activity levels.

During the Predecessor nine months ended September 30, 2019, the primary uses of cash in investing activities were (i) capital expenditures of $177 million for property, plant and equipment and the acquisition of assets held for sale and (ii) cash paid of $12 million to acquire intellectual property and other intangibles.

During the Predecessor nine months ended September 30, 2019, the primary sources of cash from investing activities were (i) proceeds from the sale of business of $319 million, primarily from the completed dispositions of our land drilling rigs operations, reservoir solutions and surface data logging businesses and (ii) proceeds of $80 million from the disposition of other assets.

Cash used in investing activities was $3 million for the three months ended March 31, 2021 compared to cash used in investing activities of $35 million for the three months ended March 31, 2020.

During the three months ended March 31, 2021, the primary uses of cash in investing activities were capital expenditures of $15 million for property, plant and equipment, offset by proceeds of $11 million from other asset dispositions.

During the three months ended March 31, 2020, the primary uses of cash in investing activities were (i) capital expenditures of $38 million for property, plant and equipment, offset by proceeds of $6 million from other asset dispositions.

Financing Activities

Our cash provided by financing activities was $400 million for the Successor nine months ended September 30, 2020 compared to cash provided by financing activities for the Predecessor of $917 million for the nine months ended September 30, 2019.

For the Successor nine months ended September 30, 2020 we received net proceeds of $457 million from the issuance of our Senior Secured Notes and used cash of $57 million for the repayment of debt and other financing activities.

For the nine months ended September 30, 2019, the Predecessor had borrowings of $1.4 billion under the DIP Credit Agreement, short-term borrowings net of repayments of $25 million primarily from the Predecessor revolving credit agreements, and long-term debt repayments of $317 million for payments on the Predecessor term loan agreement and financed leases.

In addition, the Predecessor paid $110 million in DIP financing fees and on the backstop agreement pursuant to the plan of reorganization.

The proceeds of the borrowings under the DIP Credit Agreement were used to repay certain prepetition indebtedness, cash collateralized certain obligations with respect to letters of credit and similar instruments and finance the working capital needs and general corporate purposes of the Predecessor.

Our cash used in financing activities was $9 million primarily for the repayment of debt obligations for the three months ended March 31, 2021 compared to $20 million primarily for the repayment of debt and a $12 million deferred payment for our acquisition of a joint venture in the Middle East for the three months ended March 31, 2020.

Non-GAAP Free Cash Flow

Non-GAAP free cash flow (“free cash flow”) represents cash provided by (used in) operating activities less capital expenditures for property, plant and equipment plus proceeds from the disposition of assets.

Operating cash flow was $74 million and $30 million in the three months ended March 31, 2021 and 2020, respectively.

Free cash flow was a positive $70 million and negative $2 million in the three months ended March 31, 2021 and 2020, respectively.

Management believes that free cash flow is useful to investors and management as an important liquidity measure of our ability to generate cash, pay obligations and grow the business and shareholder value.

It is a non-GAAP financial measure that should be considered in addition to, not as substitute for or superior to, cash provided by (used in) operating activities.

Sources of Liquidity

Our sources of available liquidity going forward include cash generated by our operations, cash and cash equivalent balances, accounts receivable factoring, dispositions, and availability under our LC Credit Agreement.

We have an aggregate commitments of $215 million under the LC Credit Agreement for issuance of letters of credit.

At September 30, 2020, we had approximately $168 million in outstanding letters of credit under the LC Credit Agreement and availability of $47 million.

At September 30, 2020, we had available liquidity of $842 million as defined in our LC Credit Agreement and Senior Secured Notes.

At September 30, 2020, we had sufficient liquidity to operate our business.

Our sources of available liquidity include cash generated by our operations, cash and cash equivalent balances, accounts receivable factoring, and dispositions of businesses or capital assets that no longer fit our long-term strategy.

We historically have accessed banks for short-term loans and have accessed the capital markets with debt and equity offerings.

However, the energy industry continues to have negative sentiment in the market which has impacted the ability of energy sector participants to access appropriate amounts of capital and under suitable terms.

While the market has stabilized recently, the energy industry’s access to capital remains constrained.

Although we may have access to capital markets, it may not be on terms that are commercially acceptable to the Company.

From time to time we may enter into transactions to dispose of businesses or capital assets that no longer fit our long-term strategy.

Based upon current and anticipated levels of operations, we believe we will have sufficient cash from operations and cash on hand to fund our expected financial obligations and cash requirements (discussed below) both in the short-term and long-term.

Customer Receivables

In weak economic environments, we may experience increased delays and failures to pay our invoices due to, among other reasons, a reduction in our customers’ cash flow from operations and their access to the credit markets as well as unsettled political conditions.

Given the nature and significance of the COVID-19 pandemic and disruption in the oil and gas industry, we could experience delayed customer payments and payment defaults associated with customer liquidity issues and bankruptcies.

Due to the significance of the recent disruption in the oil and gas industry, we could experience delayed customer payments and payment defaults associated with customer liquidity issues.

Cash Requirements

We anticipate our cash requirements will continue to include interest payments primarily on our long-term debt and credit agreements, payments for capital expenditures, repayment of financed leases, payments for short-term working capital needs and costs associated with our revenue and cost improvement efforts under our restructuring plans, including severance payments.

Our cash requirements may also include business acquisitions, awards under our employee incentive programs and other amounts to settle litigation related matters.

We anticipate funding these requirements from cash and cash equivalent balances, accounts receivable factoring and proceeds from disposals of businesses or capital assets that no longer fit our long-term strategy.

However, the weak operating environment has led to the inability to predict the depth and length of the adverse

economic impact on the industry.

The actions taken by management to preserve liquidity and capital include the reduction of capital expenditures, consolidation of product lines to eliminate redundancy, exiting from sub-scale operations and a higher level of headcount reductions.

In light of the challenging outlook, our capital spending for 2020 is projected to be between approximately $100 - $150 million, a reduction of approximately 50% from 2019.

Expenditures are expected to be used primarily to support the ongoing activities and commitments in our core business.

If we are unable to generate sufficient cash flows or access other sources of liquidity described in the previous paragraph, we may need to further reduce or eliminate our anticipated capital expenditures in the fourth quarter of 2020 which would further impact the business.

Cash and cash equivalents (including restricted cash of $172 million primarily related to cash collateral on our letters of credit) totaled $1.3 billion at September 30, 2020, and are held by subsidiaries outside of Ireland, our taxing jurisdiction.

We have in excess of $130 million of our cash and cash equivalents that cannot be immediately repatriated from various countries due to country central bank controls or other regulations.

Based on the nature of our structure, other than the restrictions noted above, we are generally able to redeploy cash with no incremental tax.

Our cash requirements will continue to include interest payments on our long-term debt, payments for capital expenditures, repayment of financed leases, payments for short-term working capital needs and costs associated with our revenue and restructuring payments, including severance.

Our cash requirements may also include awards under our employee incentive programs and other amounts to settle litigation related matters.

As of March 31, 2021, we had $2.1 billion in aggregate principal amount maturing on December 1, 2024 and $500 million in aggregate principal amount maturing on September 1, 2024 for our Exit Notes and Senior Secured Notes, respectively.

We expect to have interest payments of approximately $275 million annually until their maturity.

Please see “Note 7 – Borrowings and Other Obligations” for additional details.

Our 2021 payments on operating leases are expected to be $67 million and capital spending is expected to be in the range of $100 million – $130 million.

Cash and cash equivalents (including restricted cash of $166 million primarily related to cash collateral on our letters of credit) totaled $1.3 billion at March 31, 2021, and are held by subsidiaries outside of Ireland.

At March 31, 2021 we had $169 million of our cash and cash equivalents that cannot be immediately repatriated from various countries due to country central bank controls or other regulations.

Based on the nature of our structure, other than the restrictions noted above, we foresee we are able to redeploy cash with minimal to no incremental tax.

Ratings Services’ Credit Ratings

As of September 30, 2020, our Moody’s Investor Services credit rating on the newly issued Senior Secured Notes and our senior secured LC Credit Agreement was Ba3, with a negative outlook.

As of March 31, 2021, our Moody’s Investor Services credit rating on the Senior Secured Notes and the senior secured letter of credit agreement maturing on June 13, 2024 with the lenders party thereto and Deutsche Bank Trust Company Americas as administrative agent (the “LC Credit Agreement”) was Ba3, with a negative outlook.

Our Exit Notes have a credit rating of B3 with a negative outlook.

At September 30, 2020, our S&P credit rating on our Senior Secured Notes and our LC Agreement was B-, with a negative outlook.

At March 31, 2021, our S&P credit rating on our Senior Secured Notes and our LC Credit Agreement was B-, with a negative outlook.

The credit rating on our Exit Notes was CCC with a negative outlook.

While we may continue to have access to credit markets, our non-investment grade status, restrictions under our Exit Notes, Senior Secured Notes and LC agreement, and the industry downturn could limit our ability to raise capital, refinance our existing debt, or could cause us to refinance or issue debt with less favorable and more restrictive terms and conditions, and could increase certain fees and interest of our borrowings.

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

The ratings from both agencies remain unchanged from the ratings assigned at the end of 2020.

While we may continue to have access to credit markets, our credit rating, restrictions under our Exit Notes, Senior Secured Notes and LC Credit Agreement, and the industry downturn, could limit our ability to raise capital, refinance our existing debt, or could cause us to refinance or issue debt with less favorable and more restrictive terms and conditions, and could increase certain fees and interest of our borrowings.

Off Balance Sheet Arrangements

Weatherford International plc, a public limited company organized under the laws of Ireland, and as the ultimate parent of the Weatherford group, guarantees the obligations of its subsidiaries.

Please see our discussion on guarantees in “Part II - Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operation” of our 2019 Annual Report.

Please see our discussion on guarantees in “Part II - Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operation” of our Annual Report on Form 10-K for the year ended December 31, 2020 (“2020 Annual Report”).

Letters of Credit and Surety Bonds

As of September 30, 2020, we had $346 million of letters of credit outstanding, consisting of $168 million under the LC Credit Agreement and $178 million under various uncommitted facilities (of which there was $170 million in cash collateral held and recorded in “Restricted Cash” on the Condensed Consolidated Balance Sheets).

On August 28, 2020, we terminated our ABL Credit Agreement and all letters of credit outstanding under the ABL Credit Agreement were either cash collateralized or transferred to issuing banks under the LC Agreement.

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

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

As of March 31, 2021 we had $328 million of letters of credit outstanding, consisting of $160 million under the LC Credit Agreement and $168 million under various uncommitted facilities (of which there was $163 million in cash collateral held and recorded in “Restricted Cash” on our Consolidated Balance Sheets).

In Latin America we utilize surety bonds as part of our customary business practice and as of March 31, 2021, we had surety bonds outstanding of $321 million.

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

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

Critical Accounting Policies and Estimates

4 unchanged sentences

On an on-going basis, we evaluate our estimates, however, actual results may differ from these estimates under different assumptions or conditions.

There have been no material changes or developments in our evaluation of the accounting estimates and the underlying assumptions or methodologies that we believe to be critical accounting policies and estimates as disclosed in our 2019 Annual Report and our second quarter Form 10-Q filed on August 14, 2020.

Forward-Looking Statements

9 unchanged sentences

• risks associated with disease outbreaks and other public health issues, including COVID-19, their impact on the global economy and the business of our Company, customers, suppliers and other partners, changes in, and the administration of, treaties, laws, and regulations, including in response to such issues and the potential for such issues to exacerbate other risks we face, including those related to the factors listed or referenced below;

• further spread and potential for a resurgence of COVID-19 in a given geographic region and related disruptions to our business, customers, suppliers and other partners and additional regulatory measures or voluntary actions that may be put in place to limit the spread of COVID-19, including vaccination requirements and the associated availability of vaccines, restrictions on business operations or social distancing requirements, and the duration and efficacy of such restrictions;

• the price and price volatility of, and demand for, oil, natural gas and natural gas liquids;

• member-country quota compliance within the OPEC;

• member-country quota compliance within the Organization of Petroleum Exporting Countries;

• our ability to realize expected revenues and profitability levels from current and future contracts;

5 unchanged sentences

• our ability to attract, motivate and retain employees, including key personnel;

• changes to senior management;

• our ability to access to capital markets on terms that are commercially acceptable to the Company;

• our ability to access capital markets on terms that are commercially acceptable to the Company, or at all;

• our ability to manage our workforce, supply chain and business processes, information technology systems and technological innovation and commercialization, including the impact of our organization restructure, business enhancements, improvement efforts and the cost and support reduction plans;

1 unchanged sentence

• adverse weather conditions in certain regions of our operations;

• failure to ensure on-going compliance with current and future laws and government regulations, including but not limited to environmental and tax and accounting laws, rules and regulations.

• failure to ensure on-going compliance with current and future laws and government regulations, including but not limited to environmental and tax and accounting laws, rules and regulations as well as stock exchange listing rules.

Many of these factors are macro-economic in nature and are, therefore, beyond our control.

Should one or more of these risks or uncertainties materialize, affect us in ways or to an extent that we currently do not expect or consider to be significant,

or should underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from those described in this quarterly report as anticipated, believed, estimated, expected, intended, planned or projected.

Finally, our future results will depend upon various other risks and uncertainties, including, but not limited to, those detailed in our other filings with the SEC under the Securities Exchange Act of 1934 (as amended, the “Exchange Act”) and the Securities Act of 1933 (as amended, the “Securities Act”).

Should one or more of these risks or uncertainties materialize, affect us in ways or to an extent that we currently do not expect or consider to be significant, or should underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from those described in this quarterly report as anticipated, believed, estimated, expected, intended, planned or projected.

Finally, our future results will depend upon various other risks and uncertainties, including, but not limited to, those detailed in our other filings with the SEC under the Exchange Act and the Securities Act of 1933 (as amended).

For additional information regarding risks and uncertainties, see our other filings with the SEC.

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished with the SEC are made available free of charge on our web site www.weatherford.com under “Investor Relations” as soon as reasonably practicable after we have electronically filed the material with, or furnished it to, the SEC.

In the event of an inconsistency between any prior or current SEC filing, the most recent filing will control.

Quantitative and Qualitative Disclosures About Market Risk.

Other than the change in the fair value of our debt as discussed in “Note 7 – Borrowings and Other Obligations” to our Condensed Consolidated Financial Statements, our exposure to market risk has not changed materially since December 31, 2020.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis