Weatherford International plc 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. As used herein, “Weatherford,” the “Company,” “we,” “us” and “our,” refer to Weatherford International plc, a public limited company organized under the laws of Ireland, and its subsidiaries on a consolidated basis. The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements and Notes thereto included in “Item 1. Financial Statements.” Our discussion includes various forward-looking statements about our markets, the demand for our products and services and our future results. These statements are based on certain assumptions we consider reasonable. 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.” Overview We conduct operations in approximately 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. Our two product lines are as follows: (1) Completion and Production and (2) Drilling, Evaluation and Intervention. • Completion and Production (“C&P”) offers a suite of modern completion products, reservoir stimulation designs, and engineering capabilities that isolate zones and unlock reserves in deepwater, unconventional, and aging reservoirs and 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. • 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. Evaluation services merge wellsite capabilities including wireline and managed pressure drilling. We also build and rebuild well integrity for the full life cycle of the well. Using conventional to advanced equipment, we offer safe and efficient tubular running services in any environment. 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. Financial Results and Overview Revenues totaled $903 million and $1.7 billion in the second quarter and first six months of 2021, respectively, an improvement of $82 million, or 10%, and a decline of $301 million, or 15%, compared to the second quarter and first six months of 2020, respectively. The second quarter of 2021 year-over-year improvement reflects a 15% increase in service revenues driven by higher demand in certain C&P and DEI sub-product lines, primarily in the United States and Mexico, which also spurred the 37% growth in the Western Hemisphere, partially offset by a 6% decline in the Eastern Hemisphere. The decline in the first six months of 2021 was primarily due to the negative impacts of the COVID-19 pandemic, which began in the second quarter of 2020, following results from a pre-pandemic first quarter of 2020. The pandemic had an immediate negative impact in the Western Hemisphere while taking longer to impact the Eastern Hemisphere, however, faster vaccine rollouts have resulted in a swifter recovery in parts of the Western Hemisphere. Total operating income improved $522 million and $1.3 billion in the second quarter of 2021 and first six months of 2021 compared to the second quarter and first six months of 2020, respectively, primarily from lower impairment and restructuring charges. Selling, general and administrative, corporate, and research and development expense declined in the second quarter and first six months of 2021, reflecting the benefits of the cost improvement initiatives that were implemented during 2020 and earlier in 2021. Segment operating income was $34 million and $39 million in the second quarter and first six months of 2021, respectively, an increase of $42 million and was flat, respectively, compared to the second quarter and first six months of 2020. 17 Table of Contents The second quarter of 2021 year-over-year improvement was driven by the increased activity levels and demand for services across both our C&P and DEI product lines, including integrated service project (“ISP”) sales in Mexico. Impairments and Other Charges (Credits), Net Please see summary of details at “Note 2 – Impairments and Other Charges (Credits), Net” to our Condensed Consolidated Financial Statements. Exchange Listing On June 1, 2021, The Nasdaq Stock Market LLC stock exchange (“NASDAQ”) approved our application for the listing of our ordinary shares. In connection with the listing, we became subject to the reporting requirements of the Exchange Act. Our ordinary shares began trading on The Nasdaq Global Select Market on June 2, 2021 under the ticker symbol “WFRD”. Industry Trends The level of spending in the energy industry is heavily influenced by the current and expected future prices of oil and natural gas. Changes in expenditures result in an increase or decrease in demand for our products and services. Rig count is an indicator of the level of spending for the exploration for and production of oil and natural gas reserves. 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”), United Kingdom Brent crude oil and Henry Hub natural gas. Three Months Ended Year Ended 6/30/2021 6/30/2020 12/31/2020 Oil price - WTI (1) $66.09 $27.81 $39.23 Oil price - Brent (1) $68.83 $29.34 $41.76 Natural gas price - Henry Hub (2) $2.94 $1.71 $2.04 (1) Oil price measured in dollars per barrel (2) Natural gas price measured in dollars per million British thermal units (Btu), or MMBtu The average rig counts based on the weekly Baker Hughes Company rig count information were as follows: Three Months Ended Six Months Ended 6/30/2021 6/30/2020 6/30/2021 6/30/2020 North America 522 417 529 698 International 734 834 716 954 Worldwide 1,256 1,251 1,245 1,652 Business Outlook There are improving indications that the global economic and demand recovery from the COVID-19 pandemic is continuing to build towards pre-pandemic levels as both COVID-19 vaccination rates and global economic activity increase. However, with the recent resurgence of infection rates particularly among the unvaccinated and a number of international governments pushing for a return to social distancing practices we continue to be cautious about a broad-based recovery in the oil and gas industry. Oil prices have risen during the year, buoyed by supply policies led by the Organization of Petroleum Exporting Countries and the expanded alliance (“OPEC+”) and other high oil exporting non-OPEC+ nations. Average oil prices for the second quarter of 2021 are more than double the average oil prices for the second quarter of 2020 and natural gas prices have increased 72%. WTI oil spot prices have recovered to pre-pandemic levels, averaging approximately $66 per barrel during the second quarter of 2021. However, the North America and International average rig count continues to be well below pre-pandemic levels. 18 Table of Contents We expect continued improvements in our customer activity levels with the ongoing COVID-19 vaccine rollout globally and multinational economic stimulus actions which are expected to provide a measured pathway to oil and natural gas demand recovery throughout 2021. We believe that industry activity will likely continue to recover in the second half of 2021 and our consolidated revenues are expected to increase by mid- to high-single digits over the first half of 2021, which with our continued focus on managing our costs should lead to further margin expansion in the second half of 2021. We expect both our Western and Eastern Hemisphere segments to grow revenues in the second half of 2021. We continue to closely monitor the ongoing global impacts surrounding the COVID-19 pandemic, including operational and manufacturing disruptions, logistical constraints and travel restrictions. 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. COVID-19 Pandemic Impacts We have experienced and expect to continue to experience delays and a lack of availability of key components as our supplier base returns to work, manages component shortages and generally higher demand for supplies. Shipping and other logistics activities are experiencing tight availability for carriers, containers and shipping materials. This has exacerbated specific shortages and delays with supplied materials. In addition, we continue to experience certain customer restrictions that prevent access to their sites, community measures to contain the spread of the COVID-19 virus, and changes to our policies that have both restricted and changed the way our employees work. We continuously improve crew rotations and management practices to minimize our employees’ exposure to the COVID-19 virus while at client facilities. We constantly refine and update our identification and management of COVID-19 cases consistent with the latest guidance, from the Centers of Disease Control and Prevention and the World Health Organization 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. 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. 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. 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, our ability to offer solutions to more efficiently extract oil and gas while controlling costs, and our success in penetrating 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 it more difficult to obtain our targeted cost reduction benefits and to recruit, motivate and retain employees, including key personnel. Increasing investor and government focus on environmental and social governance factors, the cyclicality of the energy industry and the ongoing COVID-19 pandemic may negatively impact demand for our products and services. We are following our long-term strategy aimed at achieving sustainable 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. 19 Table of Contents 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. Favorable Three Months Ended (Unfavorable) (Dollars and shares in millions, except per share data) 06/30/21 06/30/20 % Change Revenues: Western Hemisphere $ 425 $ 310 37 % Eastern Hemisphere 478 511 (6) % Total Revenues 903 821 10 % Operating Income (Loss): Western Hemisphere 28 (23) 222 % Eastern Hemisphere 6 15 (60) % Total Segment Operating Income (Loss) 34 (8) 525 % Corporate (17) (26) 35 % Total Operating Income (Loss) Before Impairments and Other (Charges) Credits and Restructuring Charges 17 (34) 150 % Impairments and Other (Charges) Credits, Net 8 (406) 102 % Restructuring Charges — (57) 100 % Total Operating Income (Loss) 25 (497) 105 % Interest Expense, Net (72) (59) (22) % Other Expense, Net (11) (11) — % Loss Before Income Taxes (58) (567) 90 % Income Tax Provision (15) (12) (25) % Net Loss $ (73) $ (579) 87 % Net Income Attributable to Noncontrolling Interests 5 2 (150) % Net Loss Attributable to Weatherford $ (78) $ (581) 87 % Net Loss per Diluted Share $ (1.11) $ (8.30) 87 % Weighted Average Diluted Shares Outstanding 70 70 N/A Depreciation and Amortization $ 114 $ 113 (1) % 20 Table of Contents Favorable Six Months Ended (Unfavorable) (Dollars and shares in millions, except per share data) 6/30/2021 6/30/2020 % Change Revenues: Western Hemisphere $ 815 $ 898 (9) % Eastern Hemisphere 920 1,138 (19) % Total Revenues 1,735 2,036 (15) % Operating Income (Loss): Western Hemisphere 52 6 767 % Eastern Hemisphere (13) 33 (139) % Total Segment Operating Income 39 39 — % Corporate (35) (52) 33 % Total Operating Income (Loss) Before Impairments and Other (Charges) Credits and Restructuring Charges 4 (13) 131 % Impairments and Other (Charges) Credits, Net 8 (1,223) 101 % Restructuring Charges — (83) 100 % Total Operating Income (Loss) 12 (1,319) 101 % Interest Expense, Net (142) (117) (21) % Reorganization Items — (9) 100 % Other Expense, Net (15) (36) 58 % Loss Before Income Taxes (145) (1,481) 90 % Income Tax Provision (38) (56) 32 % Net Loss (183) (1,537) 88 % Net Income Attributable to Noncontrolling Interests 11 10 (10) % Net Loss Attributable to Weatherford $ (194) $ (1,547) 87 % Net Loss per Diluted Share $ (2.77) $ (22.10) 87 % Weighted Average Diluted Shares Outstanding 70 70 N/A Depreciation and Amortization $ 225 $ 270 17 % Segment Revenues Western Hemisphere revenues increased $115 million, or 37%, in the second quarter of 2021 and decreased $83 million, or 9%, in the first six months of 2021 compared to the second quarter and first six months of 2020. The second quarter of 2021 year-over-year growth in the Western Hemisphere was due to increased demand for service and products across both our C&P and DEI product lines in the U.S. and increased ISP sales in Mexico. The Western Hemisphere revenues decline of 9% in the first six months of 2021 was driven by lower activity levels for services and products across both our C&P and DEI product lines related to the global health and economic crisis due to the COVID-19 pandemic, which began negatively impacting our business and industry during the second quarter 2020. Eastern Hemisphere revenues decreased $33 million, or 6%, in the second quarter of 2021 and $218 million, or 19%, in the first six months of 2021 compared to the second quarter and first six months of 2020 due to a decline in activity resulting in lower service and product sales in both our C&P and DEI product lines since the COVID-19 pandemic impact in the second quarter of 2020. 21 Table of Contents Segment Operating Results Western Hemisphere segment operating income of $28 million and $52 million in the second quarter and first six months 2021, respectively, increased $51 million and $46 million compared to the second quarter and first six months of 2020, respectively. The year-over-year improvements were driven by the increased demand for services across both our C&P and DEI product lines, as well as lower operational and employee costs. Eastern Hemisphere segment operating income of $6 million in the second quarter of 2021 and segment operating loss of $13 million in the first six months of 2021, decreased $9 million and $46 million, respectively, compared to the second quarter and first six months of 2020. The deterioration was driven by lower activity levels across both our C&P and DEI product lines related to the global health and economic crisis, partially offset by lower operational and employee costs. Interest Expense, Net Net interest expense was $72 million and $142 million in the second quarter and first six months of 2021, respectively, and primarily 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 $59 million and $117 million in the second quarter and first six months of 2020, respectively, and primarily represents interest on our Exit Notes. See “Note 8 – Borrowings and Other Obligations” to the Condensed Consolidated Financial Statements for further details. Other Expense, Net Other expense was $11 million and $15 million in the second quarter and first six months of 2021, respectively, compared to other expense of $11 million and $36 million in the second quarter and first six months of 2020, respectively. Other expense is comprised 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 first six months year-over-year improvement was primarily due to lower currency volatility in 2021 compared to the significant volatility in the same period of the prior year following the start of the COVID-19 pandemic. Income Taxes In the three and six months ended June 30, 2021, we recognized tax expense of $15 million and $38 million, respectively, on a loss before income taxes of $58 million and $145 million, respectively, compared to the three and six months ended June 30, 2020 where we recognized tax expense of $12 million and $56 million, respectively, on a loss before income taxes of $567 million and $1.5 billion, respectively. Our income tax provisions are primarily driven by income 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. Tax expense in the three and the six months ended June 30, 2021 includes a $13 million tax benefit attributed to the reversal of a tax accrual in connection with an internal restructuring transaction completed in the second quarter of 2021. Tax expense for the six months ended June 30, 2020 included $20 million recorded in the first quarter of 2020 to recognize valuation allowance in jurisdictions where we were no longer able to forecast taxable income. Please see “Note 14 – Income Taxes” to our Condensed Consolidated Financial Statements for additional details. Restructuring, Facility Consolidation and Severance Charges Please see “Note 7 – Restructuring, Facility Consolidation and Severance Charges” to our Condensed Consolidated Financial Statements for additional details of our charges by segment. Liquidity and Capital Resources At June 30, 2021, we had total cash and cash equivalents and restricted cash of $1.4 billion, which increased $102 million compared to the year ended December 31, 2020. Included in total cash and cash equivalents was $170 million and $167 million of restricted cash at June 30, 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 six months ended June 30, 2021 and June 30, 2020: 22 Table of Contents Six Months Ended June 30, (Dollars in millions) 2021 2020 Net Cash Provided by Operating Activities $ 120 $ 61 Net Cash Used in Investing Activities (2) (62) Net Cash Used in Financing Activities (15) (36) Reconciliation of Operating Cash Flow to Non-GAAP Free Cash Flow: Net Cash Provided by Operating Activities $ 120 $ 61 Capital Expenditures for Property, Plant and Equipment (24) (73) Proceeds from Disposition of Assets 22 8 Non-GAAP Free Cash Flow $ 118 $ (4) Operating Activities Cash provided by operating activities was $120 million for the six months ended June 30, 2021 compared to $61 million for the six months ended June 30, 2020. During the six months ended June 30, 2021, the primary sources of cash provided by operating activities were driven by higher operating income, continued collections on our accounts receivables and inventory utilization, partially offset by higher interest payments. During the six months ended June 30, 2020, the primary sources of cash provided by operating activities were from collections on our accounts receivables, and lower payments for working capital activities, retention and performance cash bonuses, partially offset by payments for interest. Investing Activities Cash used in investing activities was $2 million for the six months ended June 30, 2021 compared to $62 million for the six months ended June 30, 2020. During the six months ended June 30, 2021, the primary uses of cash were capital expenditures of $24 million for property, plant and equipment, offset by proceeds of $22 million from asset dispositions. During the six months ended June 30, 2020, the primary uses of cash were capital expenditures of $73 million for property, plant and equipment, offset by proceeds of $8 million from other asset dispositions. Financing Activities Cash used in financing activities was $15 million for the six months ended June 30, 2021 compared to $36 million for the six months ended June 30, 2020. During the six months ended June 30, 2021, the primary uses of cash were for the repayment of finance lease obligations and dividends paid to noncontrolling interests. During the six months ended June 30, 2020, the primary uses of cash were for a $24 million deferred payment for our acquisition of a joint venture in the Middle East and dividends paid to noncontrolling interests. 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 $120 million and $61 million in the six months ended June 30, 2021 and 2020, respectively. Free cash flow was a positive $118 million and negative $4 million in the six months ended June 30, 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. 23 Table of Contents Sources of Liquidity 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 the capital markets for debt and equity offerings. While the market has stabilized recently, the energy industry’s access to capital is improving and although we may have access to capital markets, it may not be on terms that are commercially acceptable to the Company. 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. If the economic environment weakens we could experience delayed customer payments and payment defaults associated with customer liquidity issues. Cash Requirements Our cash requirements will continue to include interest payments on our long-term debt, payments for capital expenditures, repayment on finance 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 June 30, 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 8 – Borrowings and Other Obligations” to our Condensed Consolidated Financial Statements for additional details. Our 2021 payments on operating leases are expected to be $91 million and capital spending is expected to be approximately $100 - $110 million. Cash and cash equivalents (including restricted cash of $170 million primarily related to cash collateral on our letters of credit) totaled $1.4 billion at June 30, 2021, and are held by subsidiaries outside of Ireland. At June 30, 2021 we had $175 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 will be able to redeploy cash with minimal to no incremental tax. Ratings Services’ Credit Ratings On July 1, 2021, our S&P credit ratings improved to a B, with a stable outlook, on our Senior Secured Notes and the senior secured letter of credit agreement (the “LC Credit Agreement”). The S&P credit rating on our Exit Notes improved to a CCC+ with a stable outlook. As of June 30, 2021, our Moody’s Investor Services credit rating on the Senior Secured Notes and the LC Credit Agreement was Ba3, with a negative outlook. Our Exit Notes have a credit rating of B3 with a negative outlook. While we may continue to have access to credit markets, our credit ratings, restrictions under our Exit Notes, Senior Secured Notes and LC Credit Agreement, 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 Guarantees 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 Annual Report on Form 10-K for the year ended December 31, 2020 (“2020 Annual Report”). 24 Table of Contents Letters of Credit and Surety Bonds As of June 30, 2021, we had $331 million of letters of credit outstanding, consisting of $160 million under the LC Credit Agreement and $171 million under various uncommitted facilities (of which there was $165 million in cash collateral held and recorded in “Restricted Cash” on our Consolidated Balance Sheets). As of June 30, 2021, we had outstanding surety bonds of $307 million, which were primarily in Latin America where we utilize surety bonds as part of our customary business practice. 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 Our discussion and analysis of our financial condition and results of operation is based upon our Condensed Consolidated Financial Statements. We prepare these financial statements in conformity with U.S. GAAP. As such, we are required to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. We base our estimates on historical experience, available information and various other assumptions we believe to be reasonable under the circumstances. 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 2020 Annual Report. 25 Table of Contents Forward-Looking Statements This report contains various statements relating to future financial performance and results, business strategy, plans, goals and objectives, including certain projections, business trends and other statements that are not historical facts. These statements constitute forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “budget,” “strategy,” “plan,” “guidance,” “outlook,” “may,” “should,” “could,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions, although not all forward-looking statements contain these identifying words. Forward-looking statements reflect our beliefs and expectations based on current estimates and projections. While we believe these expectations, and the estimates and projections on which they are based, are reasonable and were made in good faith, these statements are subject to numerous risks and uncertainties. Accordingly, our actual outcomes and results may differ materially from what we have expressed or forecasted in the forward-looking statements. We undertake no obligation to correct, update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except to the extent required under federal securities laws. The following, together with disclosures under “Part II – Other Information - Item 1A. – Risk Factors”, sets forth certain risks and uncertainties relating to our forward-looking statements that may cause actual results to be materially different from our present expectations or projections: • risks associated with disease outbreaks and other public health issues, including COVID-19 and COVID-19 variants, 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 Organization of Petroleum Exporting Countries and the expanded alliance; • our ability to realize expected revenues and profitability levels from current and future contracts; • our ability to generate cash flow from operations to fund our operations; • global political, economic and market conditions, political disturbances, war, terrorist attacks, changes in global trade policies, weak local economic conditions and international currency fluctuations; • increases in the prices and lack of availability of our procured products and services; • our ability to timely collect from customers; • our ability to realize cost savings and business enhancements from our revenue and cost improvement efforts; • our ability to attract, motivate and retain employees, including key personnel; • 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; • potential non-cash asset impairment charges for long-lived assets, intangible assets or other assets; • adverse weather conditions in certain regions of our operations; and • 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 Exchange Act and the Securities Act. For additional information regarding risks and uncertainties, see our other filings with the SEC. In the event of an inconsistency between any prior or current SEC filing, the most current SEC filing would control. 26 Table of Contents Item 3. Quantitative and Qualitative Disclosures About Market Risk. Other than the change in the fair value of our debt as discussed in “Note 8 – Borrowings and Other Obligations” to our Condensed Consolidated Financial Statements, our exposure to market risk has not changed materially since December 31, 2020.