What changed in this filing

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Item 7. Management’s Discussion and Analysis

2022-02-17 compared with 2021-02-19 · 315 added, 405 removed, 192 unchanged (79% of the section changed)

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

As used in this item, 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.

As used in this item, “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 our Consolidated Financial Statements and Notes thereto included in “Item 8.

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For information about these risks and uncertainties, refer to the section entitled “Forward-Looking Statements” and the section entitled “Item 1A.

– Risk Factors.” As described in “Note 1 – Summary of Significant Accounting Policies” references to “Predecessor” relate to the Consolidated Statements of Operations for the period from January 1, 2019 through and including the adjustments from the application of Fresh Start Accounting on December 13, 2019 and for the year ended December 31, 2018 (“Predecessor Periods”).

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

References to “Successor” relate to the Consolidated Statements of Operations for the years ended December 31, 2021 and 2020 and for the period from December 14, 2019 through December 31, 2019 (“2021 Successor Period, 2020 Successor Period and 2019 Successor Period”, respectively) and are not comparable to the Consolidated Financial Statements of the Predecessor Period as indicated by the “black line” division in the financials and footnote tables, which emphasizes the lack of comparability between amounts presented.

References and comparisons to results for the year ended December 31, 2019 relate to the combined Successor and Predecessor Period (“2019 Combined Period”) as the 18 days of the Successor Period is not a significant period of time impacting the combined results.

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.

Our two product lines are as follows:

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

• Completion and Production 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.

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

The evaluation services merge wellsite capabilities including wireline and managed pressure drilling.

We also build or rebuild well integrity for the full life cycle of the well.

Using conventional to advanced

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Table of Contents Item 7 | MD&A

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 Overview

Successor revenues totaled $3.7 billion in 2020, a decrease of $1.5 billion, or 29%, compared to the 2019 Combined Period revenues, as the unprecedented global health and economic crisis sparked by the COVID-19 pandemic negatively impacted industry activity.

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

Successor consolidated operating loss of $1.5 billion worsened $305 million, or 26%, in 2020 compared to the 2019 Combined Period consolidated operating loss of $1.2 billion.

The higher operating loss in 2020 primarily reflects the decline in business demand due to the COVID-19 pandemic, long-lived asset impairment charges, goodwill impairment, and inventory charges, partially offset by the lower retention expenses and cost savings from our various restructuring activities.

Successor segment operating income was $55 million in 2020, a decrease of $139 million, compared to the 2019 Combined Period.

The decrease was driven primarily by the decline in demand for our products and services as a result of the COVID-19 pandemic and additional expense of COVID-19 protocols, partially offset by our lower cost structure.

Revenues in the 2019 Combined Period compared to 2018 decreased $529 million, or 9%, which was predominantly driven by lower activity levels in Canada, lower demand for our products and services in the United States, uncertainty related to economic conditions and customer budget reductions in Argentina, as well as decreased revenues associated with the divested land drilling rigs, laboratory services and surface logging businesses.

This decline was partially offset by increased activity in the Middle East and higher service activity in Russia and the North Sea.

Excluding the impact of revenues from the portion of the divested businesses, consolidated revenues were down $166 million, or 3% in 2019 Combined Period compared to 2018.

Consolidated operating results improved $903 million, or 43% in the 2019 Combined Period compared to 2018 while segment operating income declined $133 million, or 41% in the 2019 Combined Period compared to 2018.

The improvement in the 2019 Combined Period consolidated operating results was primarily due to lower goodwill impairment charges and the net gain on sale of businesses.

The segment operating income in the 2019 Combined Period declined due to the reduced activity in North America and an unfavorable product mix in Canada and the United States.

Lower demand for our products and services coupled with an unfavorable product mix and lack of supply chain savings caused the expected benefits from our cost reduction initiatives to slow and consequently resulted in significantly lower actual results compared to our expectations during 2019.

These declines were partially offset by higher integrated service project activity in Latin America and operational improvements in the Eastern Hemisphere as a result of a more favorable geographic and product mix.

Summary of Significant Charges and Credits

For the Successor year ended December 31, 2020, significant charges incurred totaled $1.2 billion and included $814 million of long-lived asset impairments, $239 million of goodwill impairments, $138 million of inventory charges and $45 million in other charges.

In addition, we had $206 million of restructuring charges.

Reorganization items in the 2019 Predecessor Period directly related to bankruptcy include the $4.3 billion gain on settlement of liabilities subject to compromise, $1.4 billion gain on revaluation of the Company’s assets and liabilities, and $346 million of charges for debt issuance write-offs, debt discount write-offs, backstop commitment fees, DIP financing fees and professional fees related to bankruptcy matters.

In addition, we incurred $86 million of prepetition charges for professional and other fees related to the Cases incurred before the petition date.

For the 2019 Predecessor Period, significant charges incurred totaled $1.1 billion and included $730 million of goodwill impairment, $237 million in asset write-downs and rigs related and other charges, $117 million of inventory charges and $20 million of long-lived asset impairments.

In addition, we had $189 million of restructuring charges.

Consolidated Revenues, Expenses and Operating Income Overview

Revenues totaled $3.65 billion in 2021, a decline of 1% compared to 2020.

We experienced significant declines in activity after the start of the pandemic in March of 2020 and although revenues are slightly lower in 2021, our revenues in 2021 reflect the ongoing recovery in business activity.

Revenues in 2021 reflect a 5% increase in service revenues, which was offset by a 10% decline in product revenues.

The revenue increases were related to higher demand for Drilling and Evaluation (“DRE”) and Production and Intervention (“PRI”) businesses, primarily for managed pressure drilling, wireline, intervention and pressure pumping services.

These improvements were partially offset by lower demand for products from our Well Construction and Completions (“WCC”), primarily for cementation products and liner hangers, and a decline in demand for the artificial lift within our PRI business.

Cost of services and products of $2.72 billion decreased $91 million, or 3%, compared to 2020, primarily due to cost improvement initiatives that were implemented during 2020 and early 2021.

Our costs declined despite higher service activity and increased cost for supplies and logistics.

Our cost of products and services as a percentage of revenues was 74.5% in 2021, an improvement compared to 76.2% in 2020, reflecting our cost initiative improvements and operational efficiency gains.

Selling, general, administrative and research and development costs of $823 million decreased $111 million, or 12%, due to cost improvement initiatives to reduce overhead and corporate costs that were implemented during 2020 and early 2021.

These costs as a percentage of revenues were 22.6% in 2021, an improvement compared to 25.3% in 2020, reflecting our cost initiative improvements.

Operating income of $116 million improved $1.6 billion in 2021 compared to 2020, primarily from the absence of impairment and restructuring charges, the decline in cost of services and products as well as the decline in selling, general and administrative, corporate, and research and development expense.

The improvement in operating income was driven by increased service activity levels, increased service versus product mix, higher adoption of our technology offerings and increased demand in our DRE and PRI businesses primarily for managed pressure drilling, wireline, intervention, pressure pumping services.

Our exit of certain drilling services in North America in the fourth quarter of 2020 also positively contributed to the improvement.

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For the year ended December 31, 2018, significant charges incurred totaled $2.2 billion and included $1.9 billion of goodwill impairment, $151 million of long-lived asset impairments and $87 million in other charges.

In addition, we had $126 million of restructuring charges.

Please refer to more details as discussed in “Note 3 – Fresh Start Accounting” and “Note 4 – Impairments and Other Charges.”

Goodwill and Long-lived Asset Impairments

The unprecedented global economic and industry conditions resulting from the decline in demand and impact from the COVID-19 pandemic were identified as goodwill and long-lived asset impairment indicators.

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

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

Based on our impairment tests, we determined the carrying amount of certain long-lived asset groups and reporting units exceeded their respective fair values and we recognized $814 million of long-lived asset impairments and $239 million of goodwill impairment in our Middle East & North Africa (“MENA”) and Russia, Turkmenistan and Kazakhstan (“Russia”) reporting units in “Impairments and Other Charges” on the accompanying Consolidated Statements of Operations during the year ended December 31, 2020.

The $239 million of goodwill in our MENA and Russia reporting units was established in the 2019 Successor Period upon emergence from bankruptcy as part of Fresh Start.

However in the 2019 Predecessor period, we determined that goodwill for all our reporting units in the Western Hemisphere and Eastern Hemisphere was fully impaired and we incurred a goodwill impairment charge of $730 million.

The 2019 Predecessor Period impairment indicators were a result of lower activity levels and lower exploration and production capital spending in our reporting units.

Our lower forecasted financial results were due to the continued weakness within the energy market which impacted our ability to meet the original timeline of our revenue and profitability improvement efforts under our restructuring over the past two years, defined in “Note 12 – Restructuring Charges”.

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

During 2018, we recorded a goodwill impairment of $1.9 billion which was based upon our annual fair value assessment of our business and assets.

The rapid and steep decline in oil prices and consequentially lower expectations for future exploration and production capital spending, resulted in a sharp reduction in share prices in the oilfield services sector, including our share price, which triggered the goodwill impairment.

During 2018, we also recognized long-lived asset impairments of $151 million to write-down our land drilling rigs assets.

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

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

See “Note 10 – Long-Lived Asset Impairments,” “Note 11 – Goodwill and Intangible Assets” and “Note 15 – Fair Value of Financial Instruments, Assets and Other Assets” for additional information regarding goodwill and long-lived asset impairments.

2020 vs 2019 Combined Period

Revenues totaled $3.7 billion in 2020, a decline of 29% compared to the 2019 Combined Period, 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 together with uncertainty around the extent and timing for an economic recovery, caused significant reductions to the capital spending plans of exploration and production companies.

Our revenue decline was predominantly driven by lower activity levels impacting all our product line segments, with revenue declines of 29% in DRE, 37% in PRI and 15% in WCC.

Revenue declined in North America as a result of lower demand for our products and services in the United States, but was also impacted by declines in activity internationally, primarily in Latin America, the Middle East, North Africa and Russia.

The pandemic had an immediate negative impact beginning in the second quarter of 2020 in the North America while taking longer to significantly impact our business internationally.

Operating loss of $1.5 billion worsened 26% in 2020 compared to the 2019 Combined Period, primarily from the decline in business demand due to the COVID-19 pandemic, long-lived assets impairment charges, goodwill impairment, and inventory charges.

Business Outlook

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

The impacts of the COVID-19 pandemic together with uncertainty around the extent and timing for an economic recovery, caused extreme market volatility for commodity prices and resulted in significant reductions to the capital spending during 2020 of our primary customer base, with lowering expectations of oil and gas related spending into 2021 and beyond.

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

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 will continue to effect how we and our customers and suppliers work in the future.

We expect continued improvements in our customer activity levels with the relaxing of COVID-19 restrictions globally and improved macroeconomic conditions generally, all of which are expected to provide a measured pathway to energy demand recovery in 2022.

We believe that industry activity will continue to recover and our 2022 consolidated revenues are anticipated to increase by high single to low double digits above 2021.

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

The energy services industry growth is highly dependent on many external factors, such as the global response to the COVID-19 pandemic, our customers’ capital expenditures, environmental, social and governance (“ESG”) driven changes, 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 continue to experience impacts from the COVID-19 pandemic, including inflationary pressures and delays and supply shortages when sourcing raw materials and services as everyone manages through the challenges around reopening and returning to work.

Shipping and other logistic activities are experiencing tight availability for carriers, containers and shipping materials, exacerbating the delays and lack of availability of key components.

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 strive to continuously improve crew rotations and management practices to minimize our employees’ risk of exposure to the COVID-19 virus while at customer facilities.

We are also constantly refining and updating our identification and management of COVID-19 cases through the development of updated protocols, advanced testing and response procedures consistent with the latest guidance, from the Centers of Disease Control and Prevention and the World Health Organization.

Faced with these challenges in 2020 and 2021, we evolved our product and services offerings, increasing the breadth of our digital portfolio and enhancing our applications to offer more fully integrated digital energy services solutions.

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

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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 production offerings.

Oil prices have risen recently, buoyed by recent supply-led Organization of Petroleum Exporting Countries (“OPEC”) and other high oil exporting non-OPEC nations (“OPEC+”) policy, the ongoing COVID-19 vaccine rollout, and multinational economic stimulus actions which is providing a runway for a meaningful oil demand recovery throughout 2021.

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

We continue to anticipate constraints on our ability to generate and grow our revenues, profits and cash flows given the global economic uncertainty.

We implemented, and will continue to implement, aggressive actions to right-size our business to address current market conditions, including:

• Cost reductions across all our operations, as well as our global support structure to match our reduced size;

• Consolidation of geographic and product line structures to better align with market conditions.

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 and weather conditions and other factors, including those described in the section entitled “Forward-Looking Statements” and the section entitled “Item 1A.

– Risk Factors.”

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 and pressures us to deliver our products and services at competitive rates.

In addition, as consolidation of the energy services industry continues due to market conditions, there has been an increased demand for companies to provide 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 technology 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 to continue to rise and require more advanced technology from the energy 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 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 ESG 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 in periods of over-supply or uncertain oil prices, and ultimately to generate consistent positive cash flow and positive returns on the invested capital.

Exchange Listing

On June 1, 2021, 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 increased or decreased 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”) and Henry Hub natural gas during years ended December 31, 2020, 2019 and 2018.

Commodity prices decreased during 2020 following the dual impact of the COVID-19 pandemic and the inability of OPEC and OPEC+ nations to agree on production cuts.

The level of spending in the energy industry is heavily influenced by the current and expected future prices of oil and natural gas, but is also impacted by ESG initiatives and ongoing supply chain shortages.

These factors 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 and production of oil and natural gas reserves.

The table below shows the average oil and natural gas prices for West Texas Intermediate (“WTI”) and Brent North Sea (“Brent”) crude oil and Henry Hub natural gas during years ended December 31, 2021, 2020 and 2019.

Commodity prices increased during 2021 due to demand outpacing supply as demand recovery built toward pre-pandemic levels with increased vaccination rates and global economic activity.

Average oil prices for 2021 were approximately 73% higher than the average oil prices for 2020 and natural gas prices increased by 92% over the same period.

12/31/2021 12/31/2020 12/31/2019

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$67.99 $39.23 $56.98

Oil price - Brent (1)

$70.68 $41.76 $64.36

Natural Gas price - Henry Hub (2)

$3.91 $2.04 $2.57

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

(1) Oil price measured in dollars per barrel (rounded to the nearest $0.01)

(2) Natural gas price measured in dollars per million British thermal units (Btu), or MMBtu

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North America and International average rig counts were well below pre-pandemic levels.

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

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Worldwide 1,365 1,347 2,175

As of December 31, 2020, the North America and International Rig Count totaled 410 and 665, respectively.

As of December 31, 2021, the North America and International Rig counts totaled 676 and 834, respectively.

Significant Financing Transactions

For additional details on the recap provided below, see “Note 2 – Emergence from Chapter 11 Bankruptcy Proceedings”, “Note 3 – Fresh Start Accounting”, “Note 13 – Borrowings and Other Debt Obligations” and “Loss on Extinguishment of Debt and Bond Redemption Premium” on the Consolidated Statements of Operations.

2030 Senior Notes Issuance and Exit Notes Partial Redemption

On October 27, 2021, we issued the 2030 Senior Notes with an aggregate principal amount of $1.6 billion and a stated interest rate of 8.625% per annum due in 2030.

We redeemed $1.6 billion in principal amount of our Exit Notes plus interest with net proceeds from the 2030 Senior Notes and cash on hand.

We paid and recognized a $103 million bond redemption premium and recognized a $2 million noncash loss on extinguishment of debt related to the unamortized debt issuance costs.

In addition, on October 20, 2021, we redeemed $200 million of our Exit Notes and paid a bond redemption premium of $6 million.

Subsequent to the partial redemption, $300 million in aggregate principal of our Exit Notes remains unpaid.

2028 Senior Secured Notes Issuance and 2024 Senior Secured Notes Redemption

On September 30, 2021, we issued the 2028 Senior Secured Notes with an aggregate principal amount of $500 million and a stated interest rate of 6.5% per annum due in 2028.

We repaid our 2024 Senior Secured Notes with net proceeds from the issuance of the 2028 Senior Secured Notes and cash on hand.

We paid and recognized a $22 million bond redemption premium and recognized a $37 million noncash loss on extinguishment of debt related to the unamortized debt issuance costs and original issue discount.

2024 Senior Secured Notes Issuance in 2020

On August 28, 2020, we issued the 2024 Senior Secured Notes with an aggregate principal amount of $500 million and a stated interest rate of 8.75% per annum due 2024 and repaid in full on September 30, 2021 with the issuance of the 2028 Senior Secured Notes and cash on hand.

LC Credit Agreement

We have a senior secured letter of credit agreement (the “LC Credit Agreement”) in an aggregate amount of $215 million maturing on May 29, 2024, which is used by the Company and certain of its subsidiaries for the issuance of bid and performance letters of credit.

We amended certain provisions and covenants of our LC Credit Agreement on September 20, 2021.

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Global demand for oil dropped precipitously from January through April of 2020 due to numerous different factors, but primarily including the expansion of the COVID-19 coronavirus outbreak, as governments around the world responded 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, 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 OPEC-led supply alliance agreed to production limits, which stabilized and improved oil prices.

Opportunities and Challenges

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, 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 recruit new and retain existing employees.

Oil prices have risen recently, buoyed by recent supply-led OPEC+ policy, the ongoing COVID-19 vaccine rollout, and multinational economic stimulus actions which is providing a runway for a meaningful oil demand recovery throughout 2021.

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

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 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 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.

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 relist our ordinary shares when our Board of Directors determines market conditions are appropriate.

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

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

2019 Emergence from Bankruptcy Proceedings and Fresh Start Accounting

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Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”), with ancillary proceedings filed in Ireland and Bermuda.

Upon emergence from Chapter 11, we adopted fresh start accounting (“Fresh Start Accounting”).

The plan of reorganization (as amended, the “Plan”), together with the schemes of arrangement in Ireland and Bermuda, became effective on December 13, 2019 (the “Effective Date”) and the Weatherford Parties emerged from Chapter 11 and adopted fresh start accounting (“Fresh Start Accounting”), which reflected all our assets and liabilities at fair value.

These events resulted in several financing activities, later discussed under the caption “Liquidity and Capital Resources”.

For additional details regarding the Chapter 11, see “Note 2 – Emergence from Chapter 11 Bankruptcy Proceedings” and “Note 3 – Fresh Start Accounting”.

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Upon adoption of Fresh Start Accounting, the reorganization value derived from the range of enterprise value as disclosed in the Disclosure Statement associated with the Plan, as adjusted for the revised projections filed with the SEC on a Form 8-K on October 7 and October 16, 2019, was allocated to the Company’s assets and liabilities based on their fair values (except for deferred income taxes) in accordance with ASC 805 – Business Combinations.

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

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

Under Fresh Start Accounting, our balance sheet on the Effective Date reflected all our assets and liabilities at fair value.

Our emergence from bankruptcy and the adoption of Fresh Start Accounting resulted in a new reporting entity, referred to herein as the “Successor,” for financial reporting purposes.

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As a result of the adoption of Fresh Start Accounting and the effects of the implementation of the Plan, our consolidated financial statements subsequent to December 13, 2019 are not comparable to our consolidated financial statements on or prior to December 13, 2019, and as such, “Black-line” financial statements are presented to distinguish between the Predecessor and Successor companies.

References to “Successor” relate to the Consolidated Statements of Operations for the year ended December 31, 2020 and from December 14, 2019 through December 31, 2019 (“Successor Periods”).

References to the year ended December 31, 2019 relate to the combined Successor and Predecessor Periods for the year ended December 31, 2019.

Debt Transactions and Equity Issuances

On August 28, 2020, we completed a series of financing transactions that meaningfully enhanced our liquidity, including issuing $500 million of 8.75% Senior Secured Notes (“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.

See “Note 14 – Borrowings and Other Debt Obligations” for additional details.

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

On July 3, 2019, the Company repaid all outstanding amounts due under the secured Term Loan Agreement and 364-Day Credit Agreement totaling approximately $616 million with borrowings from our DIP Credit Agreement.

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

See “Note 2 – Emergence from Chapter 11 Bankruptcy Proceedings” for additional details.

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

As of the Petition Date, the Predecessor’s senior notes and exchangeable senior notes and related unpaid accrued interest totaling $7.6 billion were placed into liabilities subject to compromise during the bankruptcy period with respect to the Predecessor as shown in “Note 3 – Fresh Start Accounting”.

Upon emergence from bankruptcy on December 13, 2019, the Predecessor’s senior and exchangeable senior notes were cancelled pursuant to the terms of the Plan, resulting in a gain on extinguishment of debt of $4.3 billion recorded in “Reorganization Items” on the Consolidated Statements of Operations.

On the Effective Date, we issued Senior Notes maturing on December 1, 2024 (“Exit Notes”) for an aggregate principal amount of $2.1 billion (of which $500 million was in the form of Exit Takeback Notes to existing creditors on the senior notes being cancelled).

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

We commenced interest payments on June 1, 2020.

For the 2019 Predecessor Period, we had net short-term repayments of $347 million primarily from our borrowings and repayments of the DIP Credit Agreement and our Predecessor Revolving Credit Agreements, including the repayment of our 364-Day Credit Agreement.

Our long-term debt repayments of $318 million on our Term Loan Agreement and financed leases.

On December 13, 2019, all previously issued and outstanding equity interests in the Predecessor were cancelled and the Company issued 69,999,954 new ordinary shares (“New Ordinary Shares”) to the holders of the Company’s existing senior notes and holders of old ordinary shares (“Old Ordinary Shares”).

The amount in excess of par value of $2.9 billion is reported in “Capital in Excess of Par Value” on the accompanying Consolidated Balance Sheets.

Weatherford International plc – 2020 Form 10-K | 25

Table of Contents Item 7 | MD&A

On the Effective Date, the Company issued warrants (“New Warrants”) to holders of the Company’s Old Ordinary Shares, to purchase up to an aggregate of 7,777,779 New Ordinary Shares in the Company, par value $0.001 (the “New Ordinary Shares”), at an exercise price of $99.96 per ordinary share.

The New Warrants are equity classified and, upon issuance, have a value of $31 million, which was recorded in “Capital in Excess of Par Value.”

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

On February 28, 2018, we issued $600 million in aggregate principal amount of our 9.875% senior notes due 2025.

The February 2018 debt offering partially funded a concurrent tender offer to purchase for cash any and all of our 9.625% senior notes due 2019.

We settled the tender offer in cash for the amount of $475 million, retiring an aggregate face value of $425 million and accrued interest of $20 million.

In April 2018, we repaid the remaining principal outstanding on an early redemption of the bond.

We recognized a cumulative bond tender loss of $34 million on these transactions in “Other Expense, Net” on the accompanying Consolidated Statements of Operations.

See “Note 14 – Borrowings and Other Debt Obligations” for additional details of our financing activities.

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

See “Note 8 – Business Combinations and Divestitures” for further details related to divestitures of businesses completed during 2019 and 2018.

Reportable Segments

The Company's chief operating decision maker (“CODM”), our chief executive officer, regularly reviews information to make operating decisions, allocate resources and assess performance of the business.

During the fourth quarter of 2021, the CODM changed the information regularly reviewed to be aligned with how we offer our services and technologies in relation to the well life cycle and we have realigned our reportable segments to reflect the change.

We now have three reportable segments:

(1) Drilling and Evaluation (2) Well Construction and Completions, and (3) Production and Intervention.

Previously we had two geographic based reportable segments, Western Hemisphere and Eastern Hemisphere.

Total revenues are from external customers and segment revenues are specific to our three reportable segments and all other revenues are specific to our non-operating segment revenues.

Revenues are further described in “Note 5 – Revenues.”

Additionally, we have changed our primary measure of segment profitability to segment adjusted EBITDA, which is based on segment earnings before interest, taxes, depreciation, amortization, share-based compensation expense and other adjustments.

Research and development expenses are included in segment adjusted EBITDA.

Corporate and other includes business activities related to all other segments (profit and loss), corporate and other expenses (overhead support and centrally managed or shared facilities costs) that do not individually meet the criteria for segment reporting.

We have revised our segment reporting to reflect our current management approach and recast prior periods to conform to the current segment presentation.

Weatherford International plc – 2021 Form 10-K | 26

Table of Contents Item 7 | MD&A

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 2020 and 2019 Successor Periods and the 2019 and 2018 Predecessor Periods are distinct reporting periods as a result of our emergence from bankruptcy on December 13, 2019.

References in these results of operations to the change and the percentage change combine the 2019 Successor Period and 2019 Predecessor Period results for the year ended December 31, 2019 in order to provide some comparability of such information to the years ended December 31, 2020 and December 31, 2018.

While this combined presentation is not presented according to generally accepted accounting principles in the United States (“GAAP”) and no comparable GAAP measure are presented, management believes that providing this financial information is the most relevant and useful method for making comparisons to the years ended December 31, 2020 and December 31, 2018 as the eighteen days of the Successor Period is not a significant period of time impacting the combined results.

Successor Predecessor Combined Change Combined Change

From From Favorable Favorable

Segment Results of Operations

The following table shows our consolidated results of operations and financial information for the referenced periods.

The 2021, 2020 and 2019 Successor Periods are distinct reporting periods from the 2019 Predecessor Period as a result of our emergence from bankruptcy on December 13, 2019.

We have combined results (“2019 Combined Period”) for the 2019 Successor and Predecessor Periods which are not presented according to generally accepted accounting principles in the United States (“GAAP”) and no comparable GAAP measure is presented, however, management believes that providing the combined financial information may be useful for making certain year-to-date comparisons.

Successor Predecessor

Favorable Favorable

Year Year 12/14/19 01/01/19 (Unfavorable) (Unfavorable)

Ended through through Ended $ % $ %

(Dollars in millions, except per share data) 12/31/20 12/31/19 12/13/19 12/31/18 2020 vs 2019 2019 vs 2018

Western Hemisphere $ 1,586 $ 121 $ 2,620 $ 3,063 $ (1,155) (42) % $ (322) (11) %

Eastern Hemisphere 2,099 140 2,334 2,681 (375) (15) % (207) (8) %

Ended Ended through through $ % $ %

(Dollars in millions) 12/31/21 12/31/20 12/31/19 12/13/19 2019 Combined 2021 vs 2020 2020 vs 2019 Combined

Drilling and Evaluation $ 1,066 $ 1,044 $ 67 $ 1,407 $ 1,474 $ 22 2 % $ (430) (29) %

Well Construction and Completions 1,353 1,414 90 1,583 1,673 (61) (4) % (259) (15) %

Production and Intervention 1,127 1,106 86 1,673 1,759 21 2 % (653) (37) %

Segment Revenues 3,546 3,564 243 4,663 4,906 (18) (1) % (1,342) (27) %

All Other 99 121 18 291 309 (22) (18) % (188) (61) %

Total Revenues 3,645 3,685 261 4,954 5,215 (40) (1) % (1,530) (29) %

3,685 261 4,954 5,744 (1,530) (29) % (529) (9) %

Segment Adjusted EBITDA:

Drilling and Evaluation $ 186 $ 132 $ (3) $ 219 $ 216 $ 54 41 % $ (84) (39) %

Well Construction and Completions 256 273 19 225 244 (17) (6) % 29 12 %

Production and Intervention 191 154 20 216 236 37 24 % (82) (35) %

Segment Adjusted EBITDA 633 559 36 660 696 74 13 % (137) (20) %

Corporate and Other (62) (100) (1) (104) (105) 38 38 % 5 5 %

Depreciation and Amortization (440) (503) (34) (447) (481) 63 13 % (22) (5) %

Shared-based Compensation Expense (25) — — (24) (24) (25) n/m 24 100 %

Other Adjustments 10 (1,442) — (1,267) (1,267) 1,452 101 % (175) (14) %

Operating Income (Loss) $ 116 $ (1,486) $ 1 $ (1,182) $ (1,181) $ 1,602 108 % $ (305) (26) %

Western Hemisphere 18 (4) 54 208 (32) (64) % (158) (76) %

Eastern Hemisphere 37 10 134 119 (107) (74) % 25 21 %

Total Segment Operating Income 55 6 188 327 (139) (72) % (133) (41) %

Corporate (111) (5) (118) (130) 12 10 % 7 5 %

Impairments and Other Charges (1,236) — (1,104) (2,155) (132) (12) % 1,051 49 %

Restructuring Charges (206) — (189) (126) (17) (9) % (63) (50) %

Prepetition Charges — — (86) — 86 100 % (86) NA

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

Gain on Sale of Businesses, Net — — 112 — (112) (100) % 112 NA

Total Operating Income (Loss) (1,486) 1 (1,182) (2,084) (305) (26) % 903 43 %

Reorganization Items (9) (4) 5,389 — (5,394) (100) % 5,385 NA

Interest Expense, Net (266) (12) (362) (614) 108 29 % 240 39 %

Total Other Expense, Net (53) — (26) (59) (27) (104) % 33 56 %

Income (Loss) before Income Taxes (1,814) (15) 3,819 (2,757) (5,618) (148) % 6,561 238 %

Income Tax Provision (85) (9) (135) (34) 59 41 % (110) (324) %

Net Income (Loss) $ (1,899) $ (24) $ 3,684 $ (2,791) $ (5,559) (152) % $ 6,451 231 %

Revenues Percentage by Product Lines

Successor Predecessor

Period From Period From

Year 12/14/19 01/01/19 Year

Ended through through Ended

12/31/2020 12/31/2019 12/13/2019 12/31/2018

Completion and Production 51 % 52 % 47 % 47 %

Drilling, Evaluation and Intervention 49 48 53 53

Total 100 % 100 % 100 % 100 %

Weatherford International plc – 2021 Form 10-K | 27

Table of Contents Item 7 | MD&A

Consolidated and Segment Revenues

2020 vs 2019 Revenues

Consolidated 2020 revenues of $3.7 billion decreased $1.5 billion, or 29%, compared to the 2019 Combined Period.

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.

• Western Hemisphere revenues decreased $1.2 billion, or 42%, in 2020 compared to the 2019 Combined Period due to the decline in activity and demand due to the COVID-19 pandemic.

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 completion, production drilling, evaluation and intervention products and services.

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

• Eastern Hemisphere revenues decreased $375 million, or 15%, in 2020 compared to the 2019 Combined Period, also due to the decline in activity in the Middle East, North Africa, Asia and Russia due to the COVID-19 pandemic.

2019 vs 2018 Revenues

Consolidated revenues for the 2019 Combined Period decreased $529 million, or 9% compared to 2018.

Excluding the impact of revenues from the divested portion of the land drilling rigs, laboratory services and surface logging businesses, consolidated revenues were down $166 million, or 3%, in 2019 compared to 2018.

• Western Hemisphere revenues decreased $322 million, or 11%, in the 2019 Combined Period compared to 2018, due to 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 completion, production, drilling, evaluation and intervention products and services.

The decline in Canada was partially offset by higher activity in integrated service projects and product sales in Mexico.

• Eastern Hemisphere revenues decreased $207 million, or 8%, in the 2019 Combined Period compared to 2018.

The decline in revenues was primarily due to lower revenues from our divested land drilling rigs businesses in the Middle East and North Africa, as well as our divested laboratories and surface logging businesses.

Increased revenues in the completions product line partially offset this decline.

Excluding the impact of revenues from the divested portion of the land drilling rigs, laboratory services and surface logging businesses, revenues in 2019 increased $105 million, or 5% in 2019 compared to 2018.

Consolidated and Segment Operating Results

2020 vs 2019 Segment Operating Results

Successor segment operating income in 2020 was $55 million , a decrease of $139 million, compared to the 2019 Combined Period.

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

Western Hemisphere Successor segment reported operating income of $18 million in the year ended December 31, 2020 declined $32 million, compared to the 2019 Combined Period.

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 reported operating income of $37 million for the year ended December 31, 2020 was down by $107 million compared to the 2019 Combined Period.

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.

Segment Revenues

Revenues totaled $3.65 billion in 2021, a decline of 1% compared to 2020 and reflected in our segment revenues as follows:

DRE revenues of $1.1 billion in 2021, increased 2% compared to 2020 primarily due to higher demand for managed pressure drilling and and wireline services and products, partially offset by a decline in drilling services and drilling fluids.

The year-over-year improvement was driven by increased activity levels, an increase in services versus product mix, and higher adoption of our technology offerings internationally.

The decline in drilling services revenue reflects the exit of certain drilling services in North America in the fourth quarter of 2020.

WCC revenues of $1.4 billion in 2021, decreased 4% compared to 2020 primarily due to lower activity for cementation products, liner hangers and tubular running services.

Internationally we experienced lower well construction and completions activity in the Middle East and Russia, which was partially offset by higher activity in North America and Latin America.

PRI revenues of $1.1 billion in 2021, increased 2% compared to 2020 primarily due to higher demand for pressure pumping, intervention services & drilling tools, and production automation & software, partially offset by a decline in demand for artificial lift services.

The year-over-year improvement was driven by increased activity levels, increase in services versus product mix, higher adoption of our technology offerings and greater demand for our services.

2020 vs 2019 Combined Period

The impact was seen across all segment divisions, with revenue declines of 29% in DRE, 37% in PRI and 15% in WCC.

The pandemic had an immediate negative impact beginning in the second quarter of 2020 in North America while taking longer to significantly impact our business internationally.

Segment Adjusted EBITDA

Segment adjusted EBITDA was $633 million in 2021, an increase of 13% compared to 2020 which is reflected in our segments as follows:

DRE segment adjusted EBITDA of $186 million in 2021, increased 41% compared to 2020 primarily due to higher demand for managed pressure drilling and wireline services and products and lower operating costs as a result of cost improvement initiatives that were implemented during 2020 and early 2021, partially offset by a decline in drilling fluids.

Positively impacting DRE segment adjusted EBITDA was the exit of certain drilling services in North America in the fourth quarter of 2020.

The year-over-year segment adjusted EBITDA improvement was driven by increased activity levels, increase in services versus product mix, higher adoption of our technology offerings and greater demand for services globally.

WCC segment adjusted EBITDA of $256 million in 2021, decreased 6% compared to 2020 primarily due to lower activity for cementation products, liner hangers and tubular running services, which was partially offset by improvements in completions margins and cost efficiencies as a result of initiatives implemented during 2020 and early 2021.

Internationally we experienced lower well construction and completions activity in the Middle East and Russia resulting in decrease segment profit, which was partially offset by higher margin activity in North America and Latin America.

Weatherford International plc – 2021 Form 10-K | 28

Table of Contents Item 7 | MD&A

2019 vs 2018 Segment Operating Results

Segment operating income decreased $133 million in the 2019 Combined Period compared 2018.

The decrease was driven by lower activity levels, an unfavorable product mix in Canada and the United States, and start-up costs for projects in Latin America.

These declines were partially offset by improved operating results from higher integrated service project activity in Latin America and operational improvements in the Eastern Hemisphere.

Excluding the impact of operating results from the divested portion of the land drilling rigs, laboratory services and surface logging businesses, segment operating results in 2019 declined $55 million compared to 2018.

• Western Hemisphere segment operating income declined $158 million, or 76%, in the 2019 Combined Period compared to 2018.

The segment income decline was driven by lower activity levels, lower operating margin product sales in Canada, start-up costs for projects in Argentina and employee retention expenses.

These declines were partially offset by improved operating results from higher integrated service project activity in Mexico.

• Eastern Hemisphere segment operating income improved $25 million, or 21%, in the 2019 Combined Period compared to 2018.

The improvement in segment operating income was due to the lower direct expenses, cost improvements, partially offset by the impact of the divestitures.

PRI segment adjusted EBITDA of $191 million in 2021, increased 24% compared to 2020 primarily due to to higher demand for intervention services & drilling tools, pressure pumping and production automation & software services, and lower operating costs as a result of cost improvement initiatives that were implemented during 2020 and early 2021, partially offset by a decline in artificial lift services.

2020 vs 2019 Combined Period

Successor segment adjusted EBITDA was $559 million in 2020, a decrease of 20% compared to the 2019 Combined Period, driven primarily from the decline in business demand due to the COVID-19 pandemic in DRE of 39% and PRI of 35%, partially offset by a 12% increase in WCC.

Segment adjusted EBITDA declined in North America as a result of lower demand for our products and services in the United States, but was also impacted by declines in activity internationally, primarily in Latin America, the Middle East, North Africa and Russia.

The pandemic had an immediate negative impact beginning in the second quarter of 2020 in North America while taking longer to significantly impact our business internationally.

Depreciation and Amortization

Depreciation and amortization decreased in 2021 compared to 2020 due to the decrease in carrying value of assets after impairments taken in 2020.

The increase in depreciation and amortization in 2020 compared to the 2019 Combined Period was due to the initial increase in carrying value of assets after a fair value adjustment at fresh start, coming out of bankruptcy on December 13, 2019.

Shared-based Compensation

We record shared-based compensation in “Selling, General and Administrative” on the accompanying Consolidated Statements of Operations.

We recognized $25 million, an immaterial amount and zero in the 2021, 2020 and 2019 Successor Periods, respectively.

During the 2019 Predecessor Period, we recognized $46 million, of which $24 million was recorded in “Selling, General and Administrative” and the remainder in“Other Charges (Credits), Net” to include $24 million related to the acceleration of share-based compensation at Fresh Start offset by $2 million in terminated executive forfeitures.

Other Adjustments

Other adjustments include goodwill and long-lived asset impairments, restructuring charges, prepetition charges, gain on sale of businesses and other charges and credits, net as applicable to the periods presented.

See “ Note 6 – Impairments and Other Charges, Net”, “Note 7 – Long-Lived Assets Impairment”, “Note 11 – Goodwill and Intangibles, Net”, “ Note 8 – Restructuring Charges”, and “Note 2 – Emergence from Chapter 11 Bankruptcy Proceedings” for additional information.

In the 2020 Successor and 2019 Predecessor Periods, the segment adjusted EBITDA of Well Construction and Completions includes $12 million and $15 million, respectively, of gains on sales of operational assets.

Non-Operating Expenses

Reorganization Items

Reorganization items in the 2019 Predecessor Period were directly related to bankruptcy and included the $4.3 billion gain on settlement of liabilities subject to compromise, $1.4 billion gain on revaluation of the Company’s assets and liabilities, and $346 million of charges for debt issuance write-offs, debt discount write-offs, backstop commitment fees, DIP financing fees and professional fees related to bankruptcy matters.

Reorganization items in the 2020 and 2019 Successor Periods totaled $9 million and $4 million, respectively.

Weatherford International plc – 2021 Form 10-K | 29

Table of Contents Item 7 | MD&A

Interest Expense, Net

Consolidated net interest expense of $266 million for year ended December 31, 2020 represents interest on our 11.0% Exit Notes, our 8.75% Senior Secured Notes and the write-off of unamortized deferred debt issuance costs of $15 million associated with the termination of our senior secured lending agreement (“ABL Credit Agreement”).

See “Note 14 – Borrowings and Other Debt Obligations” to the Consolidated Financial Statements for further details on the refinancing.

Net interest expense was $12 million for the Successor Period 2019 representing interest expense on our Exit Notes and $362 million for the 2019 Predecessor Period, as compared to $614 million for the Predecessor in 2018.

The decrease in interest expense for 2019 was primarily due to unrecognized contractual interest (no longer accruing interest) on our unsecured senior notes as well as the elimination of the amortization of deferred financing costs and debt discounts during the Chapter 11 proceedings, which began July 1, 2019, partially offset by interest on debtor-in-possession financing and default interest on our A&R Credit Agreement.

Other Income (Expense), Net

Successor other expense was $53 million for the year ended December 31, 2020 compared to Predecessor other expense of $26 million in 2019 and $59 million in 2018.

Interest expense, net was $260 million for the year ended December 31, 2021, and primarily represented interest on our Exit Notes and 2024 Senior Secured Notes, and a portion from our 2028 Senior Secured Notes and 2030 Senior Notes, newly issued later in the year.

The $251 million of interest expense, net for year ended December 31, 2020 primarily represented interest on our Exit Notes and later in the year, the 2024 Senior Secured Notes.

The $12 million for the 2019 Successor Period represented interest expense on our Exit Notes and the $362 million for the 2019 Predecessor Period represented a half year of interest expense on the Predecessor’s debt.

Upon filing for Chapter 11 cases, which began July 1, 2019, we no longer recognized interest expense on Predecessor debt in accordance with ASC 852.

See “Note 13 – Borrowings and Other Debt Obligations” to the Consolidated Financial Statements for further details.

Loss on Extinguishment of Debt and Bond Redemption Premium

During 2021, we repaid and refinanced certain of our debt obligations and recognized a $170 million loss on extinguishment of debt and bond redemption premium for the repayment of our 2024 Senior Secured Notes, the repayment of $200 million of Exit Notes and the refinancing of $1.6 billion of Exit Notes.

This loss was comprised of a $39 million loss on extinguishment of debt related to unamortized debt issuance costs and discount and a $131 million bond redemption premium on the early redemption of debt, which is presented as “Loss on Extinguishment of Debt and Bond Redemption Premium” on the Consolidated Statements of Operations.

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

Loss on Termination of ABL Credit Agreement

On December 13, 2019, we entered into a senior secured asset-based lending agreement in an aggregate amount of $450 million (the “ABL Credit Agreement”) which was terminated on August 28, 2020.

Upon its termination, we recorded $15 million of noncash “Loss on Termination of ABL Credit Agreement” on our Consolidated Financial Statements related to unamortized deferred debt issuance costs.

Other Expense, Net

Other expense, net was $29 million for the year ended December 31, 2021 compared to $53 million for the year ended December 31, 2020.

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 year-over-year improvement was primarily due to lower currency volatility in 2021 compared to the significant volatility in the same period in the prior year following the start of the COVID-19 pandemic.

Successor other expense was $53 million for the year ended December 31, 2020 compared to Predecessor other expense of $26 million in 2019.

Other expense was primarily driven by foreign currency exchange losses of $34 million for the year ended December 31, 2020 compared to $14 million for the 2019 Combined Period.

1 unchanged sentence

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

In 2019 and 2018, other expense was primarily driven by foreign currency exchange losses, letter of credit fees, other financing fees and non-service periodic pension and other post-retirement benefit expenses.

In 2019, other expense was primarily driven by foreign currency exchange losses, letter of credit fees, other financing fees and non-service periodic pension and other post-retirement benefit expenses.

Foreign exchange losses are typically due to the strengthening U.S.

dollar compared to our foreign denominated operations.

Included in other expense on the accompanying Consolidated Statements of Operations for the year ended December 31, 2018, was currency devaluation expense of $49 million primarily related to the devaluation of the Angolan kwanza due to a change in Angolan central bank policy in 2018.

Warrant fair value income was $70 million in 2018 related to the fair value adjustment to the Predecessor warrant liability.

We did not have any warrant fair value income in 2020 or 2019.

On May 21, 2019, the option period to exercise the warrants lapsed and the warrants expired unexercised with a fair value of zero.

The change in fair value of the warrant during 2018 was primarily driven by eliminating the warrant share value associated with any future equity issuance and a decrease in the Predecessor’s stock price.

Weatherford International plc – 2020 Form 10-K | 29

Table of Contents Item 7 | MD&A

In the year ended December 31, 2018 other expense included a cumulative bond tender loss of $34 million in “Other Expense, Net” on the accompanying Consolidated Statements of Operations.

We did not have any bond tender loss in 2020 or 2019.

We provide for income taxes based on the laws and rates in effect in the countries in which operations are conducted, or in which we or our subsidiaries are considered resident for income tax purposes.

3 unchanged sentences

In addition, we are unable to recognize tax benefit on our losses.

Weatherford International plc – 2021 Form 10-K | 30

Table of Contents Item 7 | MD&A

We record deferred tax assets for net operating losses and temporary differences between the book and tax basis of assets and liabilities that are expected to produce tax deductions in future periods.

1 unchanged sentence

The Company assesses the realizability of its deferred tax assets each period by considering whether it is more likely than not that all or a portion of the deferred tax assets will not be realized.

The Company considers all available evidence (both positive and negative) when determining whether a valuation allowance is required.

The Company considers all available evidence (both positive and negative) when determining whether a valuation allowance is required, with emphasis on our past operating results, the existence of cumulative losses in the most recent years and our forecast of near-term taxable income.

The Company evaluates possible sources of taxable income that may be available to realize the benefit of deferred tax assets, including projected future taxable income, the reversal of existing temporary differences, taxable income in carryback years and available tax planning strategies, and the impact of Fresh Start Accounting in making this assessment.

1 unchanged sentence

The Company concluded it was not able to realize the benefit of its deferred tax assets and has established a valuation allowance.

The income tax provision for the Successor year 2020 was $85 million as compared to a tax provision of $9 million for the Successor Period and $135 million for the Predecessor Period of 2019, and $34 million in 2018, which resulted in an effective tax rate of (5)%, (60)%, 3% and (1)%, respectively.

Our tax expense is 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 are subject to tax rules in our various jurisdiction as to their deductibility, but generally do not result in significant tax benefits to us due to our inability to forecast realization of such benefits.

Continued performance improvement in certain jurisdictions could result in a change in our realization of deferred tax asset assessment in the near future, which would release valuation allowance.

The income tax provision and respective effective tax rate was $86 million and (25)%, $85 million and (5)%, $9 million and (60)%, and $135 million and 3%, for the 2021, 2020, 2019 Successor Periods and 2019 Predecessor Period, respectively.

Our income tax provisions in 2021 and 2020 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.

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.

Our results for the 2019 Predecessor period include $32 million of tax expense related to the Fresh Start Accounting impacts and $14 million of tax benefit primarily related to goodwill and other asset impairments and write-downs.

2 unchanged sentences

Prepetition charges (charges prior to Petition Date) and reorganization items (charges after Petition Date) had no significant tax impact.

Our results for the 2018 Predecessor period include charges with $70 million tax benefit principally related to the $1.9 billion goodwill impairment.

Other significant 2018 charges did not result in significant tax benefit.

We are continuously under tax examination in various jurisdictions.

2 unchanged sentences

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 Successor year ended December 31, 2020, there were no material tax impacts to our financial statements as it relates to COVID-19 tax relief measures.

For the Successor years ended December 31, 2021 and 2020, there were no material tax impacts to our financial statements as it relates to COVID-19 tax relief measures.

Weatherford International plc – 2021 Form 10-K | 31

Table of Contents Item 7 | MD&A

Restructuring Charges

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

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

During the Successor year ended December 31, 2020, we incurred restructuring charges of $206 million.

During the 2019 and 2018 Predecessor Periods, we recognized restructuring charges of $189 million and $126 million.

Please see “Note 12 – Restructuring Charges” to our Consolidated Financial Statements for additional details of our charges by type and by segment.

Liquidity and Capital Resources

At December 31, 2020, we had total cash and cash equivalents and restricted cash of $1.3 billion of which $167 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.

The following table summarizes cash provided by (used in) each type of business activity, for the years ended December 31, 2020, 2019 and 2018:

At December 31, 2021, we had total cash and cash equivalents plus restricted cash of $1.1 billion, of which $162 million was restricted cash, compared to $1.3 billion at December 31, 2020, of which $167 million was restricted cash.

The following table summarizes cash provided by (used in) each type of business activity in the periods presented:

Successor Predecessor

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

Ended through through Ended

Ended Ended through through

(Dollars in millions) 12/31/2021 12/31/2020 12/31/2019 12/13/2019

3 unchanged sentences

Operating Activities

Cash provided by operating activities in 2021 was $322 million.

The primary sources of cash from operating activities were from higher operating income and lower accounts payable spend partially offset by higher interest payments.

Cash provided by operating activities was $210 million and $61 million during the 2020 and 2019 Successor Periods.

Cash provided by Successor operating activities during 2020 was driven by collections on our accounts receivables, partially offset by payments for interest and severance.

Cash used in operating activities was $747 million in the 2019 Predecessor Period compared to $242 million in 2018.

Cash used in operating activities in 2019 and 2018 were driven by working capital needs, payments for debt interest, and severance and other restructuring and transformation costs.

In 2019, cash used in operating activities also included payments for reorganization items and prepetition charges primarily for professional and other fees related to the Cases and retention and performance bonuses.

The primary sources of cash from operating activities were collections on our accounts receivables, partially offset by payments for interest and severance.

Cash used in operating activities was $747 million in the 2019 Predecessor Period.

The primary uses of cash from operating activities were driven by working capital needs, payments for debt interest, and severance and other restructuring and transformation costs.

In addition, there were also payments for reorganization items and prepetition charges primarily for professional and other fees related to the Cases as well as payments for retention and certain bonuses.

Investing Activities

Cash used in investing activities for the Successor was $75 million for the year ended December 31, 2020.

The primary use of cash in investing activities were capital expenditures of $154 million for property, plant and equipment.

The primary sources of cash from investing activities included $22 million from asset dispositions and $50 million from the maturity of our Angolan government bonds.

Cash used in investing activities in 2021 was $83 million.

The primary uses of cash from investing activities were for capital expenditures of $85 million and investments in marketable securities in Argentina of $39 million.

The primary source of cash from investing activities was $41 million of proceeds from asset dispositions.

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.

Cash used in investing activities was $14 million during the 2019 Successor Period primarily for capital expenditures, which was partially offset by adjustments to proceeds from a prior divestiture of a business.

Our investing activities provided cash of $149 million during the 2019 Predecessor Period and $122 million during 2018.

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During the 2019 Successor Period, the primary use of cash from investing activities was $20 million capital expenditures for property, plant and equipment.

During the 2019 Predecessor Period, the primary uses of cash in investing activities were (i) capital expenditures of $250 million for property, plant and equipment and (ii) cash paid of $13 million to acquire intellectual property and other intangibles, offset by the primary sources of cash that were (i) proceeds from the divestitures of businesses of $328 million (primarily from the divestitures of our rigs, laboratory services and surface data logging businesses) and (ii) proceeds of $84 million from the asset dispositions.

See “Note 8 – Business Combinations and Divestitures” for additional information.

During 2018, the primary uses of cash in investing activities were (i) capital expenditures of $217 million for property, plant and equipment and the acquisition of assets held for sale and (ii) cash paid of $28 million to acquire intellectual property and other intangibles.

During 2018, the primary sources of cash were (i) cash proceeds from the divestiture of business and investments of $257 million (primarily from the divestitures of our land drilling rigs businesses in Kuwait and Saudi Arabia, the continuous sucker rod service business in Canada and the sale of an equity investment) and (ii) cash proceeds of $106 million from the disposition of other assets.

Cash used in investing activities in 2020 was $75 million.

The primary uses of cash from investing activities were for capital expenditures of $154 million.

The primary sources of cash from investing activities were $22 million from asset dispositions and $50 million from the maturity of our Angolan government bonds.

Cash used in investing activities in the 2019 Successor Period was $14 million primarily for capital expenditures of $20 million.

Cash provided by investing activities in the 2019 Predecessor Period was $149 million.

The primary uses of cash from investing activities were for capital expenditures of $250 million and $13 million to acquire intellectual property and other intangibles.

The primary sources of cash from investing activities were $328 million of proceeds from divestitures (from our rigs, laboratory services and surface data logging businesses) and $84 million from asset dispositions.

Financing Activities

Cash provided by financing activities for the Successor was $348 million for the year ended December 31, 2020, sourced primarily from net proceeds of $453 million from the issuance of our Senior Secured Notes and offset by the repayment of debt, cash paid of $24 million related to a deferred consideration for our 2018 acquisition of our Qatari joint venture and other financing activities of $81 million.

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 LC Credit Agreement to $215 million.

See “Note 14 – Borrowings and Other Debt Obligations” to the Consolidated Financial Statements for further details .

Cash provided by financing activities was $749 million during the 2019 Predecessor Period.

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

See “Note 2 – Emergence from Chapter 11 Bankruptcy Proceedings” for additional details.

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

As of the Petition Date, the Predecessor’s senior and exchangeable senior notes and related unpaid accrued interest totaling $7.6 billion were placed into liabilities subject to compromise during the bankruptcy period with respect to the Predecessor as shown in “Note 3 – Fresh Start Accounting”.

Upon emergence from bankruptcy on December 13, 2019, the Predecessor’s senior and exchangeable senior notes were cancelled pursuant to the terms of the Plan, resulting in a gain on extinguishment of debt of $4.3 billion recognized in “Reorganization Items” on the Consolidated Statements of Operations.

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

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

We commenced interest payments thereunder on June 1, 2020.

In the 2019 Predecessor Period, we had net short-term debt repayments of $347 million primarily from our borrowings and repayments of the DIP Credit Agreement and our Predecessor Revolving Credit Agreements, including the repayment of our 364-Day Credit Agreement.

Our long-term debt repayments of $318 million on our Term Loan Agreement and financed leases.

Cash provided by financing activities was $168 million during the Predecessor year ended December 31, 2018.

In February of 2018, we issued $600 million of our 9.875% senior notes due 2025 for net proceeds of $586 million.

We used part of the proceeds from our debt offering to repay in full our 6.00% senior notes due March 2018 and to fund a concurrent tender offer to purchase all of our 9.625% senior notes due 2019.

Cash used in financing activities in 2021 was $403 million.

The primary uses of cash from financing activities were repayments of long-term debt of $2.3 billion associated with the partial redemption of our Exit Notes and full redemption of our 2024 Senior Secured Notes as well as finance lease obligations.

Other primary uses of cash from financing activities were $131 million in bond redemption premium payments as a result of the early redemptions and $28 million primarily for dividends to

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Net long- and short-term debt repayments, including the tender offer and borrowings under our revolving credit facilities, in 2018 totaled $378 million.

We settled the tender offer for $475 million, retiring an aggregate face value of $425 million and accrued interest of $20 million.

In April 2018, we repaid the remaining principal outstanding on an early redemption of the bond.

We recognized a cumulative bond tender loss of $34 million on these transactions in “Other Income (Expense)” on the accompanying Consolidated Statements of Operations.

The debt repayments and bond tender premium payments were partially offset by net borrowings primarily under our revolving credit facilities of $158 million.

Other financing activities in 2018 primarily included the costs incurred for the amended Credit Agreements and payments of non-controlling interest dividends.

See “Note 2 – Emergence from Chapter 11 Bankruptcy Proceedings” and “Note 14 – Borrowings and Other Debt Obligations” and “for additional details of our financing activities.

Non-GAAP Free Cash Flow

Non-GAAP Free Cash Flow (“Free Cash Flow”) represents cash flow from operations less capital expenditures (including the acquisition of assets held for sale) plus proceeds from the disposition of assets.

Free cash flow was a positive $78 million and positive $41 million during the 2020 and 2019 Successor Periods and a negative $913 million and negative $353 million during the 2019 and 2018 Predecessor Periods.

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 flow from operations.

noncontrolling interests.

The primary sources of cash from financing activities were net proceeds of $2.1 billion from the issuance of our 2030 Senior Notes and 2028 Senior Secured Notes.

Cash provided by financing activities in 2020 was $348 million, primarily sourced from borrowings of long-term debt of $453 million related to the net proceeds from the issuance of our 2024 Senior Secured Notes.

The primary uses of cash from financing activities were $24 million of deferred consideration for the 2018 acquisition of our Qatari joint venture $27 million repayments of short-term debt and $45 million primarily for dividends to noncontrolling interests.

Cash provided by financing activities was $749 million during the 2019 Predecessor Period.

The primary sources of cash from financing activities were net proceeds of $1.6 billion on our Exit Notes issued upon emergence and $1.5 billion on the DIP Credit Agreement issued between the petition date and emergence.

The primary uses of cash from financing activities were (i) the $1.5 billion repayment in full of the DIP Credit Agreement upon emergence (ii) net short-term debt repayments of $347 million primarily from the borrowings and repayments of our Predecessor Revolving Credit Agreements, including the repayment of our 364-Day Credit Agreement (iii) long-term debt repayments of $318 million related to our Predecessor Term Loan Agreement and financed leases and (iv) $137 million in DIP financing fees and payments on a backstop agreement.

For additional details on our financing activities see Significant Financing Transactions section, “Note 2 – Emergence from Chapter 11 Bankruptcy Proceedings” and “Note 13 – Borrowings and Other Debt Obligations”

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

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

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.

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

Our sources of available liquidity include cash generated by our operations, cash and cash equivalent balances, and accounts receivable factoring.

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

Exit and Senior Secured Notes and LC Credit Agreement

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

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

We commenced interest payments thereunder on June 1, 2020.

Interest of the Senior Secured Notes in 8.75% per annum and is payable semiannually on arrears on March 1 and September 1.

See “Note 14 – Borrowings and Other Debt Obligations” to the Consolidated Financial Statements for further details.

The Company is subject to a $175 million minimum liquidity covenant under our amended LC Credit Agreement and Senior Secured notes and, as defined in the applicable documents, Weatherford had available liquidity of $928 million as of December 31, 2020.

Under our amended LC Credit Agreement, the Company is also subject to a minimum secured liquidity (or cash in controlled accounts) covenant of $125 million.

Our secured liquidity was $779 million at December 31, 2020.

As of December 31, 2020, we were in compliance with the covenants of the indentures governing the Exit Notes and Senior Secured Notes and the LC Credit Agreement.

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

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

Our total cash and cash equivalents plus restricted cash of $1.1 billion remain our primary source of funds to manage any liquidity event risks.

An agreement for a new corporate revolving credit facility at terms and conditions acceptable to us would further enhance our liquidity.

LC Credit Agreement

We have a LC Credit Agreement in an aggregate amount of $215 million maturing on May 29, 2024, which is used by the Company and certain of its subsidiaries for the issuance of bid and performance letters of credit.

On September 20, 2021, certain provisions and covenants of the LC Credit Agreement were amended as follows:

• Permit the borrowing of up to an additional $400 million of secured indebtedness under an asset-based lending facility or a revolving credit facility upon compliance with certain conditions;

• Removed the minimum secured liquidity requirement;

• Increased the minimum aggregate liquidity requirement from $175 million to $300 million;

• Decreased the minimum aggregate book value of certain pledged assets requirement from $1.25 billion to $1 billion;

• Increased the ability to redeem debt to $500 million subject to a minimum aggregate liquidity of $400 million at the time of redemption.

The outstanding amount of each letter of credit under the LC Credit Agreement bears interest at London Interbank Offered Rate (“LIBOR”) plus an applicable margin of 350 basis points per annum.

We expect LIBOR to continue to be published until June 2023, and expect to transition to an alternative to LIBOR prior to that termination date.

The LC Credit Agreement currently contains provisions allowing the Administrative Agent to replace LIBOR with an alternate benchmark rate (including any mathematical or other adjustments to the benchmark (if any) incorporated therein) that has been broadly accepted by the syndicated loan market in the United States in lieu of LIBOR.

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

The LC Credit Agreement is secured by substantially all the personal assets and properties of certain subsidiaries of the Company (including a first lien on the priority collateral for the LC Credit Agreement and a second lien on the priority collateral

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for Senior Secured Notes, in each case, subject to permitted liens).

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

Ratings Services’ Credit Ratings

As of December 31, 2020, our Moody’s Investor Services credit rating on the Senior Secured Notes and our senior secured LC Credit Agreement was Ba3, with a negative outlook.

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

At December 31, 2020, our S&P credit rating on our Senior Secured Notes and our LC Agreement was B-, with a negative outlook.

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

The ratings from both agencies have been downgraded during 2020 from the ratings assigned at the end of 2019.

While we may continue to have access to credit markets, our credit rating, 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.

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.

Our credit ratings at December 31, 2021 were maintained or improved since December 31, 2020:

• Moody’s Investors Service (“Moody’s”) maintained our corporate family rating at B2, our senior unsecured notes rating at B3, and our senior secured notes and LC Credit Agreement ratings at Ba3.

The outlook was upgraded from negative to stable.

• Standard and Poor’s (“S&P”) upgraded our corporate family and senior unsecured notes ratings from CCC to B-, and upgraded our senior secured notes and LC Credit Agreement ratings from B- to B+.

The outlook was upgraded from negative to stable.

Cash Requirements

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 cost improvement efforts under our restructuring plans, including severance payments.

Our cash requirements will continue to include payments for capital expenditures, payments for short-term working capital needs, interest payments on our long-term debt, repayment on finance leases, operating costs associated with our business and restructuring payments.

During 2020, we accumulated working capital due to the sharp decrease in demand from the COVID-19 pandemic.

In 2021, operating cash flow benefited from the monetization of working capital accumulated in 2020.

As business activity rises to pre-COVID-19 pandemic levels we expect that we will utilize cash to invest in capital assets and inventory.

Our cash requirements may also include 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.

As of December 31, 2020, we had approximately $2.6 billion of long-term debt with $2.1 billion in aggregate principal amount maturing on December 1, 2024 and $500 million in aggregate principal amount maturing on September 1, 2024.

We expect to have interest payments of approximately $275 million annually until the maturity of our senior notes.

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

Our payments on operating leases and purchase obligations, including capital expenditures in the upcoming year are expected to be approximately $91 million and $364 million, respectively.

See “Note 13 – Leases” for details of our lease obligations by year.

Our capital spending for 2021 is projected to be approximately $140 million.

As of December 31, 2021, we had outstanding debt $300 million in aggregate principal amount maturing on December 1, 2024 for our Exit Notes, $500 million in aggregate principal amount for our 2028 Senior Secured Notes and $1.6 billion in aggregate principal amount of the 2030 Senior Notes.

Please see “Note 13 – Borrowings and Other Obligations” for additional details.

Our capital spending for 2022 is projected to be between $175 million to $225 million.

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

Cash and cash equivalents (including restricted cash of $167 million primarily related to cash collateral on our letters of credit) totaled $1.3 billion at December 31, 2020, and are held by subsidiaries outside of Ireland, our taxing jurisdiction.

We expect to make $215 million in interest payments in 2022 and approximately $204 million in interest payments annually until the maturity of our long-term debt obligations.

Our payments on operating leases and operating purchase obligations in the upcoming year are expected to be approximately $74 million and $177 million, respectively.

See “Note 12 – Leases” for details of our lease obligations by year.

Cash and cash equivalents plus restricted cash of $162 million (which primarily includes $158 million in cash collateral on our letters of credit) totaled $1.1 billion at December 31, 2021 and are held by subsidiaries outside of Ireland.

At December 31, 2021 we had approximately $167 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 minimal or no incremental tax.

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.

Customer Receivable

We may experience delayed customer payments and payment defaults due to, among other reasons, a weaker economic environment, reductions in our customers’ cash flow from operations, our customers’ inability to access credit markets, as well as unsettled political conditions.

Accounts Receivable Factoring

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During the 2021 Successor Period, we sold accounts receivable balances of $100 million and received cash proceeds of $85 million.

During the 2020 Successor Period, we sold accounts receivable balances of $90 million and received cash proceeds of $79 million.

During the 2019 Combined Period, we sold accounts receivable of $206 million and received cash proceeds of $193 million.

In 2018, we sold accounts receivables of $382 million and received cash proceeds of $373 million.

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

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See “Note 15 – Derivative Instruments” for additional information.

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 – Weatherford International Ltd., a Bermuda exempted company (“Weatherford Bermuda”), and Weatherford International, LLC, a Delaware limited liability company (“Weatherford Delaware”), including the notes and credit facilities listed below.

On August 28, 2020, Weatherford International Ltd., as issuer, Weatherford International plc and Weatherford International, LLC, as guarantors, and the other subsidiary guarantors party thereto, entered into an indenture with Wilmington Trust, National Association, as trustee and collateral agent, and issued the 8.75% Senior Secured Notes due September 1, 2024 in an aggregate principal amount of $500 million.

On December 13, 2019, the date of bankruptcy emergence, or the effective date pursuant to the terms of the Plan, we issued unsecured 11.00% Exit Notes due December 1, 2024 of Weatherford Bermuda guaranteed by Weatherford Delaware for an aggregate principal amount of $2.1 billion.

Upon emergence from bankruptcy on December 13, 2019, the Predecessor’s senior notes, exchangeable senior notes, and guarantees under these instruments, were cancelled pursuant to the terms of the Plan.

In addition, we repaid in full the Predecessor’s Amended and Restated Credit Agreement and Term Loan pursuant to the terms of the Plan.

See “Note 3 – Fresh Start Accounting” for additional details related to our financial restructuring.

Weatherford International plc, the ultimate parent of the Weatherford group, guarantees the obligations of its subsidiaries – Weatherford International Ltd., a Bermuda exempted company (“Weatherford Bermuda”), and Weatherford International, LLC, a Delaware limited liability company (“Weatherford Delaware”), including the notes and credit facilities listed below.

Our Exit Notes, 2024 Senior Secured Notes (before repayment in 2021), 2028 Senior Secured Notes and 2030 Senior Notes were issued by Weatherford Bermuda and guaranteed by Weatherford International plc and Weatherford Delaware and other subsidiary guarantors party thereto.

Letters of Credit and Surety Bonds

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

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

As of December 31, 2021, we had surety bonds outstanding of $293 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.

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The accounting policies we believe require management’s most difficult, subjective or complex judgments and are the most critical to our reporting of results of operations and financial position are as follows:

Fresh Start Accounting

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On the Effective Date in 2019, we adopted and applied the relevant guidance with respect to the accounting and financial reporting for entities that have emerged from bankruptcy proceedings, or “Fresh Start Accounting.” Under Fresh Start Accounting, our balance sheet on the Effective Date reflects all of our assets and liabilities at fair value.

Our emergence from bankruptcy and the adoption of Fresh Start Accounting resulted in a new reporting entity, referred to herein as the “Successor,” for financial reporting purposes.

To facilitate discussion and analysis of our financial condition and results of operations herein, we refer to the reorganized Weatherford Parties as the Successor for periods subsequent to December 13, 2019 and as the “Predecessor” for periods on or prior to December 13, 2019.

As a result of the adoption of Fresh Start Accounting and the effects of the implementation of the Plan, our consolidated financial statements subsequent to December 13, 2019 are not comparable to our consolidated financial statements on or prior to December 13, 2019, and as such, “black-line” financial statements are presented to distinguish between the Predecessor and Successor Periods.

Allocation of Reorganization Value under Fresh Start Accounting

Upon emergence on December 13, 2019, we allocated the reorganization value under Fresh Start Accounting to the Company’s identifiable tangible and intangible assets and liabilities based on estimated fair values.

The excess of the reorganization value over the amount allocated to the assets and liabilities was recorded as goodwill.

We used all available information to estimate fair values, including quoted market prices, the carrying value of acquired assets and widely accepted valuation techniques such as discounted cash flows.

We engaged third-party appraisal firms to assist in fair value determination of PP&E, inventories, leases, identifiable intangible assets and any other significant assets or liabilities when appropriate.

The judgments made in determining the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact our results of operations.

As a result of Fresh Start Accounting on December 13, 2019, we recognized and allocated $239 million of goodwill to our MENA and Russia reporting units and have presented that amount as of December 31, 2019 as Successor goodwill, which represents the excess of reorganization value over the fair value of our identifiable tangible and intangible assets and liabilities.

During the first and second quarters of 2020, the unprecedented global economic and industry conditions resulting from the decline in demand and impact from the COVID-19 pandemic were identified as goodwill and long-lived asset impairment indicators or triggering events.

We identified lower exploration and production capital spending that resulted in lower drilling and forecasted activity.

We performed interim quantitative goodwill assessment as of March 31, 2020 and June 30, 2020 as described in “Note 11 – Goodwill and Intangible Assets” to our Consolidated Financial Statements.

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

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

Goodwill impairment occurs when the carrying amount of a reporting unit exceeds the fair value.

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

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Long-Lived Assets

Long-lived assets, which include PP&E, definite-lived intangibles and right of use assets, comprise a significant amount of our assets.

We make estimates about their expected useful lives.

Long-lived assets, which include property, plant and equipment (“PP&E”), definite-lived intangibles and right of use assets, comprise a significant amount of our assets.

The carrying value of our long-lived assets at December 31, 2021 and 2020 was approximately $1.8 billion and $2.2 billion, respectively.

The cost of the long-lived assets is then amortized over its expected useful life.

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Intangible Assets 5 – 10 years

In estimating the useful lives of our property, plant and equipment, we rely primarily on our actual experience with the same or similar assets.

In estimating the useful lives of our PP&E, we rely primarily on our actual experience with the same or similar assets.

The useful lives of our intangible assets are determined by the years over which we expect the assets to generate a benefit based on legal, contractual or regulatory terms.

Long-lived assets to be held and used by us are reviewed to determine whether any events or changes in circumstances indicate that we may not be able to recover the carrying amount of the asset or asset group.

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

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

Long-lived assets to be held and used by us are reviewed to determine whether any events or changes in circumstances, known as triggering events, indicate that we may not be able to recover the carrying amount of the asset or asset group.

Triggering events include, but are not limited to, reduced or expected sustained decreases in cash flows generated by an asset or asset group, negative changes in industry conditions (such as global rig count, commodity prices, and the global economy), a significant change in the long-lived assets’ use or physical condition, the introduction of competing technologies, and legal and regulatory challenges.

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

If the undiscounted cash flows do not exceed the carrying value of the long-lived asset group, the asset group is not recoverable and impairment is recognized to the extent the carrying amount exceeds the estimated fair value of the asset group.

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Based on our impairment tests, we determined the carrying amount of certain long-lived asset groups exceeded their respective fair values and we recognized of long-lived asset impairments in “Impairments and Other Charges” on the accompanying Consolidated Statements of Operations during the year ended December 31, 2020.

See “Note 10 – Long-Lived Asset Impairments”, “Note 11 – Goodwill and Intangible Assets” and “Note 15 – Fair Value of Financial Instruments, Assets and Other Assets” for additional information regarding the impairment and the fair value determination used in the impairment calculation.

See “Note 7 – Long-Lived Assets Impairment”, “Note 11 – Goodwill and Intangibles, Net” and “Note 14 – Fair Value of Financial Instruments, Assets and Other Assets” for additional information regarding the impairment and the fair value determination used in the impairment calculation.

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

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assumptions, specifically the forecasted revenue, forecasted operating margins, and discount rate assumptions used to determine the fair value of certain asset groups.

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

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

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See “Note 14 – Fair Value of Financial Instruments, Assets and Other Assets” for additional information regarding the fair value determination used in the impairment calculation.

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

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

The decline and its impact on demand represent a significant adverse change in the business climate and an indication that some of our long-lived assets may not be recoverable.

Based on the impairment indicators noted we performed an analysis of our long-lived assets in 2020 and 2019 and recorded long-lived and other asset impairment charges to adjust to fair value.

See “Note 10 – Long-Lived Asset Impairments” for additional information regarding the long-lived assets impairment.

Management cannot predict the occurrence of future impairment-triggering events, so we continue to assess whether indicators of impairment to long-lived assets exist due to the current business conditions in the oilfield services industry.

See “Note 7 – Long-Lived Assets Impairment” for additional information regarding the long-lived assets impairment.

We take into account the differences between the financial statement treatment and tax treatment of certain transactions.

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We recognize the impact of an uncertain tax position taken or expected to be taken on an income tax return in the financial statements at the largest amount that is more likely than not to be sustained upon examination by the relevant taxing authority.

We operate in over 75 countries through hundreds of legal entities.

We operate in approximately 75 countries through hundreds of legal entities.

As a result, we are subject to numerous tax laws in the jurisdictions, and tax agreements and treaties among the various taxing authorities.

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The ultimate realization of the deferred tax assets depends on the ability to generate sufficient taxable income of the appropriate character and in the related jurisdiction in the future.

In evaluating our ability to recover our deferred tax assets, we consider the available positive and negative evidence, including our past operating results, the existence of cumulative losses in the most recent years and our forecast of future taxable income.

In estimating future taxable income, we develop assumptions, including the amount of future pre-tax operating income, the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies.

These assumptions require significant judgment.

The assessment requires significant judgment.

We have considered various tax planning strategies that we would implement, if necessary, to enable the realization of our deferred tax assets;

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Our valuation allowance on our deferred tax assets was $1.4 billion at December 31, 2021.

Allowance for Credit Losses

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

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

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

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

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

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

We maintain an allowance for credit losses in order to record accounts receivable at their net realizable value.

Significant judgment is involved in recognizing this allowance.

The determination of the collectability requires us to use estimates and make judgments regarding future events and trends, including monitoring our customers’ payment history and current creditworthiness, as well as consideration of the overall business and political climate in which our customers operate.

The allowance for credit losses in “Accounts Receivable, Net of Allowance for Credit Losses” was $32 million, or 4%, over total gross accounts receivable as of December 31, 2020 and was zero as of December 31, 2019 due to Fresh Start Accounting.

We believe that our allowance for credit loss is adequate to cover bad debt losses under current conditions.

However, uncertainties regarding changes in the financial condition of our customers, either adverse or positive, could impact the amount and timing of any additional provisions for doubtful accounts that may be required.

A 5% change in the current allowance for doubtful accounts would have had an immaterial impact on loss before income taxes in 2020.

Inventory Reserves

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This review requires us to make judgments regarding potential future outcomes.

Our estimates in 2020 included assessing the impact of the COVID-19 pandemic and the resulting impact to our business forecast.

Our estimates included assessing the impact of the COVID-19 pandemic and the resulting impact to our business forecast.

Our assessment of our inventory specifically identified inventory in which we could not forecast demand and excess and obsolete inventory.

At December 31, 2020, inventory reserves of $119 million represented 14% of gross inventory and we had no reserves at December 31, 2019 as a result of fresh start accounting.

At December 31, 2021, inventory reserves of $ 159 million represented 19% of gross inventory and at December 31, 2020 inventory reserves of $ 119 million represented 14% of gross inventory.

We believe that our inventory reserves as of December 31, 2021 are adequate to properly state inventory at the lower of cost or net realizable value.

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Weatherford International plc – 2021 Form 10-K | 38

New Accounting Pronouncements

See “Note 5 – New Accounting Pronouncements” to our Consolidated Financial Statements for additional information.

Table of Contents Forward-Looking Statements

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 I – 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, 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, employees, 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 (“OPEC”);

• 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;

• our ability to comply with, and respond to, climate change, environmental, social and governance and other “sustainability” initiatives and future legislative and regulatory measures both globally and in the specific geographic regions in which we and our customers operate;

• our ability to effectively and timely address the need to conduct our operations and provision of services to our customers more sustainably and with a lower carbon footprint;

• our ability to effectively and timely adapt our technology portfolio, products and services to address and participate in changes to the market demands for the transition to alternate sources of energy such as geothermal, carbon capture and responsible abandonment, including our digitalization efforts;

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

• 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;

• our ability to service our debt obligations;

• potential non-cash asset impairment charges for long-lived assets, intangible assets or other assets;

• 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.

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

Weatherford International plc – 2021 Form 10-K | 39

Table of Contents Forward-Looking Statements

should underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from those described in this annual 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, the “Securities Act”).

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

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

What changed 10-K

Item 7. Management’s Discussion and Analysis