Weatherford International plc 10-K

Item 8. Financial Statements and Supplementary Data INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE PAGE Reports of Independent Registered Public Accounting Firm ( KPMG LLP , Houston, TX Firm ID 185 ) 39 Consolidated Statements of Operations for the years ended December 31, 2022, 2021 and 2020 42 Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2022, 2021 and 2020 43 Consolidated Balance Sheets as of December 31, 2022 and 2021 44 Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2022, 2021 and 2020 45 Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021 and 2020 46 Notes to Consolidated Financial Statements 47 Weatherford International plc – 2022 Form 10-K | 38 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors Weatherford International plc: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Weatherford International plc and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 8, 2023 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Assessment of impairment triggering events related to certain long-lived assets As discussed in Notes 1 and 4 to the consolidated financial statements, the Company evaluates long-lived assets, consisting of property, plant and equipment, definite-lived intangible assets, and operating lease right-of use assets, for impairment whenever events or changes in circumstances, known as triggering events, indicate that the carrying amount of an asset or asset group may not be recoverable. The triggering events evaluated by the Company include 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 asset’s use or physical condition, the introduction of competing technologies, and legal and regulatory challenges. The carrying value of long-lived assets as of December 31, 2022 was $1.5 billion. Weatherford International plc – 2022 Form 10-K | 39 Table of Contents We identified the assessment of impairment triggering events related to certain long-lived asset groups as a critical audit matter. The assessment of whether (i) reduced or expected sustained decreases in cash flows generated by an asset group and (ii) negative changes in industry conditions represented a triggering event required a higher degree of subjective auditor judgment. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s triggering events assessment. This included a control related to the Company’s process to identify and evaluate triggering events that indicate the carrying value of an asset or asset group may not be recoverable. We evaluated the Company’s identification of triggering events related to the evaluation of cash flow trends for certain asset groups by comparing historical cash flow trends to the asset groups’ carrying values. Further, we evaluated the Company’s assessment of changes in industry conditions by comparing them to changes in global rig count, commodity prices, and economic outlook using data obtained from publicly available industry and market information. /s/ KPMG LLP We have served as the Company’s auditor since 2013. Houston, Texas February 8, 2023 Weatherford International plc – 2022 Form 10-K | 40 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors Weatherford International plc: Opinion on Internal Control Over Financial Reporting We have audited Weatherford International plc and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements), and our report dated February 8, 2023 expressed an unqualified opinion on those consolidated financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ KPMG LLP Houston, Texas February 8, 2023 Weatherford International plc – 2022 Form 10-K | 41 Table of Contents WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31, (Dollars and shares in millions, except per share amounts) 2022 2021 2020 Revenues: Services $ 2,698 $ 2,353 $ 2,250 Products 1,633 1,292 1,435 Total Revenues 4,331 3,645 3,685 Costs and Expenses: Cost of Services 1,688 1,547 1,550 Cost of Products 1,332 1,169 1,257 Research and Development 90 85 97 Selling, General and Administrative 778 738 837 Goodwill and Long-Lived Assets Impairment — — 1,053 Restructuring Charges 22 — 206 Other Charges (Credits) 9 ( 10 ) 171 Total Costs and Expenses 3,919 3,529 5,171 Operating Income (Loss) 412 116 ( 1,486 ) Other Income (Expense): Interest Expense, Net ( 179 ) ( 260 ) ( 251 ) Loss on Extinguishment of Debt and Bond Redemption Premium ( 5 ) ( 170 ) — Loss on Termination of ABL Credit Agreement — — ( 15 ) Other Expense, Net ( 90 ) ( 29 ) ( 62 ) Income (Loss) Before Income Taxes 138 ( 343 ) ( 1,814 ) Income Tax Provision ( 87 ) ( 86 ) ( 85 ) Net Income (Loss) 51 ( 429 ) ( 1,899 ) Net Income Attributable to Noncontrolling Interests 25 21 22 Net Income (Loss) Attributable to Weatherford $ 26 $ ( 450 ) $ ( 1,921 ) Basic Income (Loss) Per Share Attributable to Weatherford $ 0.37 $ ( 6.43 ) $ ( 27.44 ) Basic Weighted Average Shares Outstanding 71 70 70 Diluted Income (Loss) Per Share Attributable to Weatherford $ 0.36 $ ( 6.43 ) $ ( 27.44 ) Diluted Weighted Average Shares Outstanding 72 70 70 The accompanying notes are an integral part of these consolidated financial statements. Weatherford International plc – 2022 Form 10-K | 42 Table of Contents WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Year Ended December 31, (Dollars in millions) 2022 2021 2020 Net Income (Loss) $ 51 $ ( 429 ) $ ( 1,899 ) Foreign Currency Translation ( 5 ) ( 5 ) ( 38 ) Defined Benefit Pension 18 13 ( 14 ) Other Comprehensive Income (Loss) 13 8 ( 52 ) Comprehensive Income (Loss) 64 ( 421 ) ( 1,951 ) Net Income Attributable to Noncontrolling Interests 25 21 22 Comprehensive Income (Loss) Attributable to Weatherford $ 39 $ ( 442 ) $ ( 1,973 ) The accompanying notes are an integral part of these consolidated financial statements. Weatherford International plc – 2022 Form 10-K | 43 Table of Contents WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, (Dollars and shares in millions, except par value) 2022 2021 Assets: Cash and Cash Equivalents $ 910 $ 951 Restricted Cash 202 162 Accounts Receivable, Net of Allowance for Credit Losses of $ 26 at December 31, 2022 and $ 31 at December 31, 2021 989 825 Inventories, Net 689 670 Other Current Assets 253 303 Total Current Assets 3,043 2,911 Property, Plant and Equipment, Net of Accumulated Depreciation of $ 773 at December 31, 2022 and $ 623 at December 31, 2021 918 996 Intangible Assets, Net of Accumulated Amortization of $ 480 at December 31, 2022 and $ 328 at December 31, 2021 506 657 Operating Lease Assets 115 113 Other Non-current Assets 138 97 Total Assets $ 4,720 $ 4,774 Liabilities: Short-term Borrowings and Current Portion of Long-term Debt $ 45 $ 12 Accounts Payable 460 380 Accrued Salaries and Benefits 367 343 Income Taxes Payable 141 140 Current Portion of Operating Lease Liabilities 44 59 Other Current Liabilities 413 398 Total Current Liabilities 1,470 1,332 Long-term Debt 2,203 2,416 Operating Lease Liabilities 117 128 Other Non-current Liabilities 379 402 Total Liabilities 4,169 4,278 Shareholders’ Equity: Ordinary Shares - Par value $ 0.001 ; Authorized 1,356 , Issued and Outstanding 71 at December 31, 2022 and 70 at December 31, 2021 — — Capital in Excess of Par Value 2,928 2,904 Retained Deficit ( 2,371 ) ( 2,397 ) Accumulated Other Comprehensive Loss ( 22 ) ( 35 ) Weatherford Shareholders’ Equity 535 472 Noncontrolling Interests 16 24 Total Shareholders’ Equity 551 496 Total Liabilities and Shareholders’ Equity $ 4,720 $ 4,774 The accompanying notes are an integral part of these consolidated financial statements. Weatherford International plc – 2022 Form 10-K | 44 Table of Contents WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Dollars in millions) Par Value of Issued Shares Capital In Excess of Par Value Retained Deficit Accumulated Other Comprehensive Income (Loss) Non-controlling Interests Total Shareholders’ Equity Balance at December 31, 2019 $ — $ 2,897 $ ( 26 ) $ 9 $ 36 $ 2,916 Net Income (Loss) — — ( 1,921 ) — 22 ( 1,899 ) Other Comprehensive Loss — — — ( 52 ) — ( 52 ) Dividends to Noncontrolling Interests — — — — ( 28 ) ( 28 ) Balance at December 31, 2020 $ — $ 2,897 $ ( 1,947 ) $ ( 43 ) $ 30 $ 937 Net Income (Loss) — — ( 450 ) — 21 ( 429 ) Equity Awards, Granted, Vested and Exercised — 7 — — — 7 Other Comprehensive Income — — — 8 — 8 Dividends to Noncontrolling Interests — — — — ( 27 ) ( 27 ) Balance at December 31, 2021 $ — $ 2,904 $ ( 2,397 ) $ ( 35 ) $ 24 $ 496 Net Income — — 26 — 25 51 Equity Awards, Granted, Vested and Exercised — 18 — — — 18 Other Comprehensive Income — — — 13 — 13 Dividends to Noncontrolling Interests — — — — ( 30 ) ( 30 ) Other — 6 — — ( 3 ) 3 Balance at December 31, 2022 $ — $ 2,928 $ ( 2,371 ) $ ( 22 ) $ 16 $ 551 The accompanying notes are an integral part of these consolidated financial statements. Weatherford International plc – 2022 Form 10-K | 45 Table of Contents WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, (Dollars in millions) 2022 2021 2020 Cash Flows From Operating Activities: Net Income (Loss) $ 51 $ ( 429 ) $ ( 1,899 ) Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities: Depreciation and Amortization 349 440 503 Bond Redemption Premium and Loss on Extinguishment of Debt and Termination of ABL Credit Agreement 5 170 15 Goodwill and Long-Lived Assets Impairment — — 1,053 Inventory Charges 36 62 210 Asset Write-Downs and Other Charges 5 — 60 Employee Share-Based Compensation Expense 25 25 — Loss (Gain) on Disposition of Assets ( 41 ) ( 22 ) 2 Deferred Income Tax Provision (Benefit) 4 ( 10 ) ( 5 ) Change in Operating Assets and Liabilities, Net: Accounts Receivable ( 193 ) ( 6 ) 378 Inventories ( 56 ) ( 18 ) 64 Accounts Payable 84 56 ( 250 ) Other Assets and Liabilities, Net 80 54 79 Net Cash Provided by Operating Activities $ 349 $ 322 $ 210 Cash Flows From Investing Activities: Capital Expenditures for Property, Plant and Equipment $ ( 132 ) $ ( 85 ) $ ( 154 ) Proceeds from Divestiture of Businesses and Investments — — 11 Proceeds from Disposition of Assets 82 41 22 Proceeds from Bond Maturities — — 50 Other Investing Activities ( 4 ) ( 39 ) ( 4 ) Net Cash Used in Investing Activities $ ( 54 ) $ ( 83 ) $ ( 75 ) Cash Flows From Financing Activities: Borrowings of Long-term Debt $ — $ 2,073 $ 453 Repayments of Long-term Debt ( 198 ) ( 2,313 ) ( 9 ) Bond Redemption Premium ( 5 ) ( 131 ) — Repayments of Short-term Debt, Net — ( 4 ) ( 27 ) Deferred Consideration Payment — — ( 24 ) Dividends to Noncontrolling Interests ( 30 ) ( 21 ) ( 28 ) Other Financing Activities ( 15 ) ( 7 ) ( 17 ) Net Cash Provided by (Used in) Financing Activities $ ( 248 ) $ ( 403 ) $ 348 Effect of Exchange Rate Changes on Cash and Cash Equivalents ( 48 ) ( 8 ) 2 Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash ( 1 ) ( 172 ) 485 Cash, Cash Equivalents and Restricted Cash at Beginning of Period 1,113 1,285 800 Cash, Cash Equivalents and Restricted Cash at End of Period $ 1,112 $ 1,113 $ 1,285 Supplemental Cash Flow Information Interest Paid $ 220 $ 269 $ 232 Income Taxes Paid, Net of Refunds $ 86 $ 62 $ 79 The accompanying notes are an integral part of these consolidated financial statements. Weatherford International plc – 2022 Form 10-K | 46 Table of Contents Item 8 | Notes to the Consolidated Financial Statements WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1 – Summary of Significant Accounting Policies Organization and Nature of Operations Weatherford International plc (“Weatherford Ireland”), an Irish public limited company, together with its subsidiaries (“Weatherford,” the “Company,” “we,” “us” and “our”), is a multinational energy services company. Weatherford is one of the world’s leading providers of equipment and services used in the drilling, evaluation, completion, production and intervention of oil, geothermal and natural gas wells. We operate in approximately 75 countries and have service and sales locations in oil and natural gas producing regions globally. Many of our businesses, have been operating for more than 50 years. The authorized share capital of Weatherford includes 1.356 billion ordinary shares with a par value of $ 0.001 per share. On June 1, 2021, The Nasdaq Stock Market LLC stock exchange (“NASDAQ”) approved our application for the listing of our ordinary shares. In connection with the listing, we became subject to the reporting requirements of the Securities Exchange Act of 1934 (as amended, the “Exchange Act”). Our ordinary shares began trading on The Nasdaq Global Select Market on June 2, 2021 under the ticker symbol “WFRD”. Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Exchange Act for annual financial information. We consolidate all wholly owned subsidiaries and controlled joint ventures and eliminate intercompany balances in consolidation. Certain reclassifications have been made to the financial statements and accompanying footnotes to conform to the Company’s current period presentation. Emergence from Bankruptcy On July 1, 2019, we filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas. On December 13, 2019 (“Effective Date”), after all conditions to effectiveness were satisfied, we emerged from bankruptcy after successfully completing the reorganization. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, the reported amounts of revenues and expenses during the reporting period, and disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates and assumptions, including those related to allowance for credit losses, inventory valuation reserves, recoverability of long-lived assets, useful lives used in depreciation and amortization, income taxes and related valuation allowance, accruals for contingencies, actuarial assumptions to determine costs and liabilities related to employee benefit plans, and share-based compensation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. Cash and Cash Equivalents We consider all highly liquid investments with original maturities of three months or less to be cash equivalents. Restricted Cash Our restricted cash balance of $ 202 million at December 31, 2022 and $ 162 million at December 31, 2021 primarily includes cash collateral for certain of our letters of credit facilities. Weatherford International plc – 2022 Form 10-K | 47 Table of Contents Item 8 | Notes to the Consolidated Financial Statements Allowance for Credit Losses on Accounts Receivables We establish an allowance for credit losses based on various factors, including historical experience, current conditions and environments in which our customers operate, the aging status and reasonable and supportable forecasts. 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. 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. Past due balances over 365 days and over a specified amount are reviewed individually for collectability. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Major Customers and Credit Risk Substantially all of our customers are engaged in the energy industry. This concentration of customers may impact our overall exposure to credit risk, either positively or negatively, in that customers may be similarly affected by changes in economic and industry conditions. We perform periodic credit evaluations of our customers and do not generally require collateral in support of our trade receivables. We maintain allowances for credit losses. International sales also present various risks, including risks of war, civil disturbances and governmental activities that may limit or disrupt markets, restrict the movement of cash, or result in the deprivation of contract rights or the taking of property without fair consideration. Most of our international sales are to large international or national oil companies and these sales may result in a concentration of receivables from such companies. As of December 31, 2022 , accounts receivable in Mexico and the U.S. accounted for 21 % and 12 %, respectively, of our total net outstanding account receivables. Consistent with prior periods, although we have experienced delay of payments in Mexico, the balances due are not in dispute and we do not expect to have any material write-offs of receivables in the country. No other country accounted for more than 10% of our net outstanding accounts receivables balance. For the years ended December 31, 2022, 2021 and 2020, no individual customer accounted for more than 10 % of our consolidated revenues. Inventories We state our inventories at the lower of cost or net realizable value using either the first-in, first-out (“FIFO”) or average cost method. Cost represents third-party invoice or production cost. Production cost includes material, labor and manufacturing overhead. To maintain a carrying value that is the lower of cost or net realizable value, we regularly review inventory quantities on hand and compare to estimates of future product demand, market conditions, our production requirements, and technological developments. We maintain reserves for excess, slow moving and obsolete inventory and we may periodically recognize additional charges for inventory in which we determine there is no forecasted demand. Property, Plant and Equipment (“PP&E”) PP&E is both owned and under finance leases. Owned PP&E are initially stated at cost and finance leases are initially stated at the present value of lease payments. Both are depreciated on straight-line basis over its estimated useful life. Subsequently, PP&E is measured at cost less accumulated depreciation and adjusted for impairment, when applicable. The carrying values are based on our estimates and judgments relative to capitalized costs, useful lives and salvage value, where applicable. We expense maintenance and repairs as incurred and capitalize expenditures for improvements as well as renewals and replacements that extend the useful life of the asset. The estimated useful lives of our major classes of PP&E are as follows: Major Classes of Property, Plant and Equipment PP&E Estimated Useful Lives Buildings and leasehold improvements 10 – 40 years or lease term Rental and service equipment 3 – 10 years Machinery and other 2 – 12 years Weatherford International plc – 2022 Form 10-K | 48 Table of Contents Item 8 | Notes to the Consolidated Financial Statements Intangible Assets Our identifiable intangible assets include developed and acquired technologies and our trade names, amortized on a straight-line basis over their estimated economic lives, generally ranging from 5 years (developed and acquired technologies) to 10 years (trade names). As many areas of our business rely on patents and proprietary technology, we seek patent protection both inside and outside the U.S. for products and methods that appear to have commercial significance. We capitalize patent defense costs when we determine that a successful defense is probable. Leases We are committed under various operating lease agreements primarily related to office space and equipment. Generally, these leases include renewal provisions and rental payments, which may be adjusted for taxes, insurance and maintenance related to the property. Leases with an initial term of 12 months or less (“short-term leases”) are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. Operating lease assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date and include related options to extend or terminate lease terms that are reasonably certain of being exercise. We determine if an arrangement is classified as a lease at its inception. As most of our leases do not provide an implicit rate of return, on a quarterly basis, we use our incremental borrowing rate, together with the lease term information available at commencement date of the lease, in determining the present value of lease payments. Long-Lived Assets Impairment Long-lived assets, consisting of PP&E, operating lease assets and intangible assets, to be held and used 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 group, negative changes in industry conditions (such as global rig count, commodity prices, and the global economy), a significant change in the long-lived asset’s 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, impairment is recognized to the extent the carrying amount exceeds the estimated fair value of the asset group, as determined by a discounted cash flow analysis Research and Development Expenditures Research and development expenditures are expensed as incurred. Derivative Financial Instruments We enter into foreign currency forward contracts to mitigate the risk of future cash flows denominated in a foreign currency. The amounts will fluctuate, depending on exchange rate volatility, the volume of our foreign currency transactions, and our decisions to hedge. The notional amounts of our foreign currency forward contracts do not generally represent amounts exchanged by the parties and thus are not a measure of the cash requirements related to these contracts or of any possible loss exposure. The amounts actually exchanged at maturity are calculated by reference to the notional amounts and by other terms of the derivative contracts, such as exchange rates. Our foreign currency derivatives are not designated as hedging instruments under Accounting Standards Codification “ASC” 815 Derivatives and Hedging, and the changes in fair value of the contracts are recorded in each period in “Other Expense, Net” on the accompanying Consolidated Statements of Operations. We record derivative instruments on the balance sheet at their fair value as either assets or liabilities. See “Note 12 – Derivative Instruments” for additional information. We monitor the creditworthiness of our counterparties, which are multinational commercial banks. The fair values of all our outstanding derivative instruments are determined using a model with Level 2 inputs including quoted market prices for contracts with similar terms and maturity dates. Weatherford International plc – 2022 Form 10-K | 49 Table of Contents Item 8 | Notes to the Consolidated Financial Statements Foreign Currency Results of operations for our foreign subsidiaries with functional currencies other than the U.S. dollar are translated using average exchange rates during the period. Assets and liabilities translated using the exchange rates in effect at the balance sheet dates are included in “Accumulated Other Comprehensive Loss” on the accompanying Consolidated Statements of Shareholders' Equity. For our subsidiaries with a functional currency that differs from the currency of their balances and transactions, inventories, PP&E and other non-monetary assets and liabilities, together with their related elements of expense or income, are remeasured into the functional currency using historical exchange rates. All monetary assets and liabilities are remeasured into the functional currency at current exchange rates. Remeasurement gains and losses are recognized during the period incurred and recognized in “Other Expense, Net” on the accompanying Consolidated Statements of Operations. Share-Based Compensation We account for equity-classified share-based payment awards, including restricted share unit and performance unit awards by recognizing the grant date fair value as an expense, net of forfeitures, over the service period, which is usually the vesting period. For those share-based awards that are settled in cash and recorded as a liability, such as phantom restricted share units, the fair value and associated expense is adjusted when the published price of our stock changes. We record shared-based compensation in “Selling, General and Administrative” on the accompanying Consolidated Statements of Operations. Income Taxes We account for taxes under the asset and liability method. Income taxes have been provided based upon the tax laws and rates in the countries in which our operations are conducted and income is earned. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. A valuation allowance for deferred tax assets is recorded when it is more likely than not that some or all of the benefit from the deferred tax asset will not be realized. The impact of an uncertain tax position taken or expected to be taken on an income tax return is recognized in the financial statements at the largest amount that is more likely than not to be sustained upon examination by the relevant taxing authority. Disputes, Litigation and Contingencies We accrue an estimate of costs to resolve certain disputes, legal matters and contingencies when a loss on these matters is deemed probable and reasonably estimable. For matters not deemed probable or not reasonably estimable, we have not accrued any amounts. Our contingent loss estimates are based upon an analysis of potential results, assuming a combination of possible litigation and settlement strategies. The accuracy of these estimates is impacted by the complexity of the associated issues. Revenue Recognition We account for revenue in accordance with ASU 2014-09, Revenue from Contracts with Customers (Topic 606) , and all of the related amendments, collectively referred to as “Topic 606”. Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. The majority of our revenue is derived from short-term contracts. Our products and services are generally sold based upon purchase orders, contracts or other legally enforceable arrangements with our customers that include fixed or determinable prices but do not generally include right of return provisions or other significant post-delivery obligations. If the terms of a service contract give us the right to invoice the customer for an amount that corresponds directly with the value of our performance completed to date, revenues are recognized over time at the amount to which we have the right to invoice. For certain long-term contracts, our revenue is recognized for services over time as the services are rendered and we utilize an output method such as time elapsed or footage drilled, which coincides with how customers receive the benefit. We lease drilling tools, artificial lift pumping equipment and other unmanned equipment to customers as operating leases. These equipment rental revenues are generally provided based on call-out work orders that include fixed per unit prices and are derived from short-term contracts. Equipment rental revenues are recognized under ASU No. 2016-02, Leases (Topic 842) and are recorded within “Services Revenue” on the accompanying Consolidated Statements of Operations. Weatherford International plc – 2022 Form 10-K | 50 Table of Contents Item 8 | Notes to the Consolidated Financial Statements Contract Balances The timing of revenue recognition, billings and cash collections results in billed and unbilled accounts receivable (included in “Accounts Receivable, Net”), contract assets (included in “Other Current Assets” and “Other Non-Current Assets”), and contract liabilities (included in “Other Current Liabilities”) on our Consolidated Balance Sheets. We recognize receivables for work completed on service contracts but not billed in which the rights to consideration are conditional as contract assets. We recognize contract liabilities when consideration is received in advance of the recognition of revenue. Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. We generally bill our sales of products and services upon completion of the performance obligation. Product sales are billed and recognized when control passes to the customer. Our products are produced in a standard manufacturing operation, even if produced to our customer’s specifications. Our payment terms vary by the type and location of our customer and the products or services offered. For certain products or services and customer types, we require payment before the products or services are delivered to the customer and record as a contract liability. We defer revenue recognition on such payments until the products or services are delivered to the customer. Revenue is occasionally generated from contracts that include multiple performance obligations. We account for individual products and services separately if they are distinct and the product or service is separately identifiable from other items in the contract and if a customer can benefit from it on its own or with other resources that are readily available to the customer. The consideration, including any discounts, is allocated between separate products and services based on their standalone selling prices. The standalone selling prices are determined based on the prices at which we separately sell our products and services. For items not sold separately (e.g. term software licenses in our Completion and Production product line), we estimate standalone selling prices using the adjusted market assessment approach. Costs of relocating equipment without contracts are expensed as incurred. We provide certain assurance warranties on product sales which range from one to five years but do not offer extended warranties on any of our products or services. These assurance warranties are not separate performance obligations thus no portion of the transaction price is allocated to our obligations under these warranties. We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. Income (Loss) per Share Basic income (loss) per share for all periods presented equals net income (loss) divided by the weighted average shares outstanding during the period including participating securities. Diluted income (loss) per share is computed by dividing net income (loss) by our weighted average shares outstanding during the period including participating securities and any potential dilutive shares, when applicable. Accounting Standards Issued Not Yet Adopted Evaluations of all other new accounting pronouncements that have been issued, but not yet effective are on-going, and at this time are not expected to have a material impact on our Consolidated Financial Statements. Weatherford International plc – 2022 Form 10-K | 51 Table of Contents Item 8 | Notes to the Consolidated Financial Statements 2 – Segment Information 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. The CODM regularly reviews information aligned with how we offer our services and technologies in relation to the well life cycle as reflected in our reportable segments. All of our segments are enabled by a suite of digital monitoring, control and optimization solutions using advanced analytics to provide safe, reliable and efficient solutions throughout the well life cycle, including responsible abandonment. We have three reportable segments: (1) Drilling and Evaluation (2) Well Construction and Completions, and (3) Production and Intervention. Drilling and Evaluation (“DRE”) offers a suite of services including managed pressure drilling, drilling services, wireline and drilling fluids. DRE offerings range from early well planning to reservoir management through innovative tools and expert engineering to optimize reservoir access and productivity. Well Construction and Completions (“WCC”) offers products and services for well integrity assurance across the full life cycle of the well. The primary offerings are tubular running services, cementation products, completions, liner hangers and well services. WCC deploys conventional to advanced technologies, providing safe and efficient services in any environment during the well construction phase. Production and Intervention (“PRI”) offers a suite of reservoir stimulation designs, and engineering capabilities that isolate zones and unlock reserves in conventional and unconventional wells, deep water, and aging reservoirs. The primary offerings are intervention services & drilling tools, artificial lift, digital solutions (previously production automation & software), sub-sea intervention and pressure pumping services in select markets. 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 3 – Revenues.” Our primary measure of segment profitability is 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 (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. Weatherford International plc – 2022 Form 10-K | 52 Table of Contents Item 8 | Notes to the Consolidated Financial Statements Year Ended December 31, (Dollars in millions) 2022 2021 2020 Revenues: Drilling and Evaluation $ 1,328 $ 1,066 $ 1,044 Well Construction and Completions 1,521 1,353 1,414 Production and Intervention 1,395 1,127 1,106 Segment Revenues 4,244 3,546 3,564 All Other 87 99 121 Total Revenues $ 4,331 $ 3,645 $ 3,685 Segment Adjusted EBITDA: Drilling and Evaluation $ 324 $ 186 $ 132 Well Construction and Completions 299 256 273 Production and Intervention 261 191 154 Segment Adjusted EBITDA $ 884 $ 633 $ 559 Corporate and Other ( 67 ) ( 62 ) ( 100 ) Depreciation and Amortization ( 349 ) ( 440 ) ( 503 ) Share-based Compensation Expense (a) ( 25 ) ( 25 ) — Other Adjustments (b) : Long-Lived and Other Asset Impairment $ — $ — $ ( 1,053 ) Restructuring Charges ( 22 ) — ( 206 ) Other (Charges) Credits ( 9 ) 10 ( 183 ) Other Adjustments $ ( 31 ) $ 10 $ ( 1,442 ) Operating Income (Loss) $ 412 $ 116 $ ( 1,486 ) (a) See “Note 15 – Share-Based Compensation” for additional information. (b) See “Note 4 – Goodwill and Long-Lived Assets Impairment” and “Note 5 – Restructuring Charges” for additional information. During 2020, segment adjusted EBITDA for Well Construction and Completions included a $ 12 million gain on sale of operational assets otherwise shown as part of “Other Charges (Credits)” on the accompanying Consolidated Statements of Operations. Weatherford International plc – 2022 Form 10-K | 53 Table of Contents Item 8 | Notes to the Consolidated Financial Statements Year Ended December 31, (Dollars in millions) 2022 2021 2020 Depreciation and Amortization: Drilling and Evaluation $ 112 $ 164 $ 183 Well Construction and Completions 99 123 151 Production and Intervention 86 102 112 Corporate and Other 52 51 57 Total Depreciation and Amortization $ 349 $ 440 $ 503 Capital Expenditures: Drilling and Evaluation $ 54 $ 18 $ 27 Well Construction and Completions 35 18 23 Production and Intervention 32 36 73 Corporate and Other 11 13 31 Total Capital Expenditures $ 132 $ 85 $ 154 December 31, (Dollars in millions) 2022 2021 Total Assets: Drilling and Evaluation $ 713 $ 783 Well Construction and Completions 993 974 Production and Intervention 729 686 Total Reportable Segment Assets 2,435 2,443 Corporate and Other (a) 2,285 2,331 Total $ 4,720 $ 4,774 (a) Corporate and other assets primarily include cash and cash equivalents, certain intangible assets, and centrally managed or shared facilities. PP&E, Net and Operating Lease Assets by Geographic Area As of December 31, 2022 and 2021 the U.S. accounted for 22 % and 23 %, respectively, of our PP&E, Net and operating lease assets identifiable by geography. No other country accounted for more than 10% of our PP&E, Net and operating lease assets identifiable by geography as of December 31, 2022 and 2021. We had no PP&E, Net and operating lease assets in our country of domicile (Ireland) as of December 31, 2022 and 2021. December 31, (Dollars in millions) 2022 2021 North America (a) $ 246 $ 269 Latin America 176 163 Middle East/North Africa/Asia 354 385 Europe/Sub-Sahara Africa/Russia 239 267 PP&E, Net and Operating Lease Assets by Geography (b) $ 1,015 $ 1,084 (a) North America consists of the U.S. and Canada. (b) Corporate assets not allocated by geography are excluded from this total. Weatherford International plc – 2022 Form 10-K | 54 Table of Contents Item 8 | Notes to the Consolidated Financial Statements 3 – Revenues Disaggregated Revenues For additional details on our revenue recognition policies see “Note 1 – Summary of Significant Accounting Policies”. The following tables disaggregate our revenues from contracts with customers by geographic region and includes equipment rental revenues. Equipment rental revenues were $ 146 million, $ 131 million and $ 150 million in 2022, 2021 and 2020, respectively. The U.S. accounted for 20 %, 19 % and 20 % of revenues in 2022, 2021 and 2020, respectively. No other country accounted for more than 10% of our revenue in 2022, 2021 and 2020. We had no revenue in our country of domicile (Ireland) in 2022, 2021 and 2020. Year Ended December 31, (Dollars in millions) 2022 2021 2020 Revenues by Geographic Areas: North America (a) $ 1,104 $ 896 $ 889 Latin America 1,062 814 697 Europe/Sub-Sahara Africa/Russia 764 737 747 Middle East/North Africa/Asia 1,401 1,198 1,352 Total Revenues $ 4,331 $ 3,645 $ 3,685 (a) North America consists of the U.S. and Canada. Contract Balances The timing of our revenue recognition, billings and cash collections result in the recording of accounts receivable, contract assets, and contract liabilities. The following table summarizes these balances as of December 31, 2022 and December 31, 2021: December 31, (Dollars in millions) 2022 2021 Receivables for Product and Services in Accounts Receivable, Net $ 954 $ 795 Receivables for Equipment Rentals in Account Receivable, Net $ 35 $ 30 Accounts Receivable, Net of Allowance for Credit Losses of $ 26 at December 31, 2022 and $ 31 at December 31, 2021 (a) $ 989 $ 825 Contract Assets in Other Current Assets $ 39 $ 47 Contract Assets in Other Non-Current Assets $ 21 $ 14 Contract Liabilities in Other Current Liabilities (b) $ 54 $ 45 (a) The change in allowance for credit losses includes charges offset primarily by recoveries and write-offs. The credit loss charges were $ 10 million, $ 30 million and $ 32 million during 2022, 2021 and 2020, respectively. Offsets to allowance for credit losses were primarily recoveries and write-offs of $ 15 million, $ 31 million and nil during 2022, 2021 and 2020, respectively. (b) Revenues recognized during the year ended December 31, 2022 and 2021 that were included in the contract liabilities balance at the beginning of each year were approximately $ 39 million and $ 35 million, respectively. Weatherford International plc – 2022 Form 10-K | 55 Table of Contents Item 8 | Notes to the Consolidated Financial Statements 4 – Goodwill and Long-Lived Assets Impairment Goodwill and Long-Lived Assets Impairment We recorded the following in “Goodwill and Long-Lived Assets Impairment” on the accompanying Consolidated Statements of Operations: Year Ended December 31, (Dollars in millions) 2022 2021 2020 Long-lived Assets Impairment $ — $ — $ 814 Goodwill Impairment — — 239 Total Goodwill and Long-lived Assets Impairment $ — $ — $ 1,053 Goodwill Impairment As of December 31, 2020, we no longer carry goodwill on the Consolidated Balance Sheets. During 2020, based on our interim goodwill impairment assessments, we determined the fair value of our reporting units were less than their carrying values, and recognized goodwill impairment charges to fully impair our goodwill of $ 239 million (also the cumulative impairment loss). We identified impairment indicators that triggered quantitative goodwill assessments. The fair values of our reporting units were determined using a combination of the income approach and the market approach for comparable companies in our industry, a Level 3 fair value analysis. Determining the fair value of the reporting units required management to develop significant judgments, including estimating and discounting future cash flows by reporting unit, specifically forecasted revenue, forecasted operating margins and discount rates. Long-Lived Assets Impairment We did not recognize long-lived assets impairments during 2022 or 2021. During 2020, the global economic and industry conditions resulting from the decline in demand and impact from the COVID-19 pandemic were identified as impairment indicators. As a result, we performed interim impairment assessments of our property, plant and equipment, definite-lived intangible assets, and operating lease assets with the assistance of a third-party valuation advisor. We determined the carrying amount of certain long-lived assets exceeded their respective fair values and recognized $ 814 million of long-lived asset impairments as summarized by asset class and segment in the table below, which was included in “Goodwill and Long-Lived Assets Impairment” on the Consolidated Statements of Operations. The fair values of our long-lived assets were determined using discounted cash flows under the income approach, a Level 3 fair value analysis. The income approach required significant assumptions to determine the fair value of an asset or asset group including the estimated discounted future cash flows, forecasted revenues and operating margins and the discount rate. Long-Lived Assets Impairment by Asset Class and Segment Year Ended December 31, 2020 (Dollars in millions) DRE WCC PRI All Other Total Property, Plant and Equipment $ 195 $ 126 $ 232 $ 18 $ 571 Intangible Assets 76 39 40 — 155 Operating Lease Assets 14 20 54 — 88 Long-lived Assets Impairment $ 285 $ 185 $ 326 $ 18 $ 814 Weatherford International plc – 2022 Form 10-K | 56 Table of Contents Item 8 | Notes to the Consolidated Financial Statements 5 – Restructuring Charges During 2022, “Restructuring Charges” on the accompanying Consolidated Statements of Operations were primarily related to the launch of a multi-year footprint consolidation and workforce efficiency initiative aimed at improving fulfillment operations. No restructuring charges were recognized in 2021. During 2020, our restructuring charges included workforce reductions, organization restructurings, facility consolidations and other cost reduction measures and efficiency initiatives targeted to better align with activity levels at the time. Restructuring liabilities were $ 25 million and $ 17 million as of December 31, 2022 and 2021, respectively, of which $ 16 million and $ 12 million are recorded in “Other Current Liabilities” and $ 9 million and $ 5 million in “Other Non-current Liabilities” as of December 31, 2022 and 2021, respectively, on the accompanying Consolidated Balance Sheets. The change in liabilities include restructuring charges, primarily offset by cash payments. The following table presents restructuring charges by type (including asset related charges) and by segment (and corporate and other) for following periods: Year Ended December 31, (Dollars in millions) 2022 2021 2020 Severance Charges $ 14 $ — $ 132 Facility Exit Charges 8 — 10 Inventory Charges (a) — — 15 Property, Plant and Equipment (a) — — 40 Operating Lease and Other Assets (a) — — 9 Total Restructuring Charges $ 22 $ — $ 206 (a) Asset write-downs included in restructuring charges. Year Ended December 31, (Dollars in millions) 2022 2021 2020 Drilling and Evaluation $ 5 $ — $ 35 Well Construction and Completions 7 — 60 Production and Intervention 5 — 52 Corporate and Other 5 — 59 Total Restructuring Charges $ 22 $ — $ 206 Weatherford International plc – 2022 Form 10-K | 57 Table of Contents Item 8 | Notes to the Consolidated Financial Statements 6 – Inventories, Net Inventories, net of reserves of $ 129 million and $ 159 million as of December 31, 2022 and December 31, 2021, respectively, by category were as follows: December 31, (Dollars in millions) 2022 2021 Finished Goods $ 601 $ 595 Work in Process and Raw Materials, Components and Supplies 88 75 Inventories, Net $ 689 $ 670 The change in inventory reserves includes the inventory charges below, primarily offset by the disposal of inventory previously reserved. Inventory charges were recognized in the following captions on our Consolidated Statements of Operations: Year Ended December 31, (Dollars in millions) 2022 2021 2020 Inventory Charges in “Cost of Products” $ 32 $ 55 $ 57 Inventory Charges in “Restructuring Charges” — — 15 Inventory Charges in “Other Charges (Credits)” 4 7 138 Total Inventory Charges (a) $ 36 $ 62 $ 210 (a) Inventory charges in 2020 were additionally driven by the impact of the COVID-19 pandemic. 7 – Property, Plant and Equipment, Net Property, plant and equipment, net was composed of the following: December 31, (Dollars in millions) 2022 2021 Land, Buildings and Leasehold Improvements $ 476 $ 484 Rental and Service Equipment 983 902 Machinery and Other 232 233 Property, Plant and Equipment, Gross 1,691 1,619 Less: Accumulated Depreciation 773 623 Property, Plant and Equipment, Net $ 918 $ 996 Depreciation expense was $ 194 million, $ 284 million and $ 340 million in 2022, 2021 and 2020. See discussion at “Note 4 – Goodwill and Long-Lived Assets Impairment” for impairment recognized in 2020. Weatherford International plc – 2022 Form 10-K | 58 Table of Contents Item 8 | Notes to the Consolidated Financial Statements 8 – Intangible Assets, Net The components of intangible assets, net were as follows: December 31, 2022 Gross Net Carrying Accumulated Intangible (Dollars in millions) Amount Amortization Assets Developed and Acquired Technology $ 591 $ ( 359 ) $ 232 Trade Names 395 ( 121 ) 274 Intangible Assets, Net $ 986 $ ( 480 ) $ 506 December 31, 2021 Gross Net Carrying Accumulated Intangible (Dollars in millions) Amount Amortization Assets Developed and Acquired Technology $ 590 $ ( 247 ) $ 343 Trade Names 395 ( 81 ) 314 Intangible Assets, Net $ 985 $ ( 328 ) $ 657 Amortization expense was $ 155 million, $ 156 million and $ 163 million in 2022, 2021, and 2020, respectively. Based on the carrying value of intangible assets at December 31, 2022 , amortization expense for the subsequent five years is estimated as follows (dollars in millions): Period Amount 2023 $ 157 2024 146 2025 42 2026 41 2027 41 Weatherford International plc – 2022 Form 10-K | 59 Table of Contents Item 8 | Notes to the Consolidated Financial Statements 9 – Leases The following table presents our lease expense components: Year Ended December 31, (Dollars in millions) 2022 2021 2020 Lease Expense Components: Operating Lease Expense $ 57 $ 61 $ 76 Short-term and Variable Lease Expense 90 65 63 Subtotal of Operating Lease Expense $ 147 $ 126 $ 139 Finance Lease Expense: Amortization of Assets and Interest on Lease Liabilities 18 16 15 Sublease Income ( 3 ) ( 4 ) ( 6 ) Total Lease Expense $ 162 $ 138 $ 148 Future commitments under operating and finance leases are as follows: Operating Finance (Dollars in millions) Leases Leases Maturity of Lease Liabilities as of December 31, 2022 : 2023 $ 55 $ 18 2024 38 16 2025 31 14 2026 24 13 2027 16 3 After 2027 91 1 Total Lease Payments 255 65 Less: Interest ( 94 ) ( 10 ) Present Value of Lease Liabilities $ 161 $ 55 Weatherford International plc – 2022 Form 10-K | 60 Table of Contents Item 8 | Notes to the Consolidated Financial Statements Years Ended (Dollars in millions except years and percentages) 12/31/2022 12/31/2021 12/31/2020 Other Supplemental Information: Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 80 $ 89 $ 101 Operating cash outflows from finance leases $ 5 $ 5 $ 5 Financing cash outflows from finance leases $ 16 $ 13 $ 9 Assets obtained in exchange for: Operating leases $ 50 $ 23 $ 37 Finance leases $ 18 $ 6 $ 4 Weighted-average remaining lease term (years) Operating leases 8.8 8.9 8.1 Finance leases 3.9 4.8 5.9 Weighted-average discount rate (percentages) Operating leases 9.1 % 9.6 % 9.6 % Finance leases 8.5 % 8.9 % 9.1 % Weatherford International plc – 2022 Form 10-K | 61 Table of Contents Item 8 | Notes to the Consolidated Financial Statements 10 – Borrowings and Other Debt Obligations Total debt carrying values consisted of the following: December 31, (Dollars in millions) 2022 2021 Current portion of 6.5 % Senior Secured Notes due 2028 “2028 Senior Secured Notes” $ 11 $ — Current portion of 11.00 % Exit Notes due 2024 “Exit Notes” 20 — Finance Lease Current Portion 14 12 Short-term Borrowings and Current Portion of Long-term Debt $ 45 $ 12 8.625 % Senior Notes due 2030 “2030 Senior Notes” $ 1,586 $ 1,584 6.5 % Senior Secured Notes due 2028 “2028 Senior Secured Notes” 471 488 11.00 % Exit Notes due 2024 “Exit Notes” 105 300 Finance Lease Long-term Portion 41 44 Long-term Debt $ 2,203 $ 2,416 Our Exit Notes and 2028 Senior Secured Notes were issued by Weatherford International Ltd., a Bermuda exempted company (“Weatherford Bermuda”), and guaranteed by the Company and Weatherford International, LLC, a Delaware limited liability company (“Weatherford Delaware”) and other subsidiary guarantors party thereto. Our 2030 Senior Notes were originally issued by Weatherford Bermuda and guaranteed by the Company and Weatherford Delaware and other subsidiary guarantors party thereto. On December 1, 2022, the indenture related to our 2030 Senior Notes was amended and supplemented to add Weatherford Delaware as co-issuer and co-obligor, and concurrently releases the guarantee of Weatherford Delaware. The bond redemption premiums and noncash loss on extinguishment of debt related to the unamortized debt issuance costs described in the following paragraphs are presented as “Loss on Extinguishment of Debt and Bond Redemption Premium” on the Consolidated Statements of Operations. Additionally, debt issuance costs described in the following paragraphs reduce the carrying amount of the debt liability and are recognized using the effective interest rate method over the term of the debt in “Interest Expense, Net” on our Consolidated Financial Statements. Exit Notes On December 13, 2019, we issued unsecured 11.00 % Exit Notes due in 2024 for an aggregate principal amount of $ 2.1 billion. Interest on the Exit Notes accrues at the rate of 11.00 % per annum and is payable semiannually on June 1 and December 1 and commenced June 1, 2020. Proceeds from the issuance were reduced by debt issuance costs. On October 20, 2021, we redeemed $ 200 million in principal amount and paid related accrued interest of $ 8 million along with a bond redemption premium of $ 6 million. On October 27, 2021, we redeemed $ 1.6 billion in principal and paid related accrued interest of $ 71 million along with a bond redemption premium of $ 103 million and recognized a $ 2 million noncash loss on extinguishment of debt related to the unamortized debt issuance costs. This redemption used net proceeds from our issuance of $ 1.6 billion of 2030 Senior Notes (defined below) and cash on hand. On August 10, 2022 and November 17, 2022, we redeemed $ 50 million and $ 125 million, respectively, in principal amount and paid the related accrued interest along with a bond redemption premium of $ 5 million. During the fourth quarter of 2022, we elected to redeem an additional $ 20 million and present this amount as “Short-term Borrowings and Current Portion of Long-term Debt” on the Consolidated Financial Statements as of December 31, 2022. At December 31, 2022 , the carrying value of $ 125 million represents the total remaining unpaid principal. Subsequent to year-end, in January 2023, we redeemed the $ 20 million in principal in short-term and paid related accrued interest along with a bond redemption premium. Weatherford International plc – 2022 Form 10-K | 62 Table of Contents Item 8 | Notes to the Consolidated Financial Statements 2024 Senior Secured Notes On August 28, 2020, we entered into an indenture and issued the 8.75 % Senior Secured Notes for an aggregate principal amount of $ 500 million maturing September 1, 2024 (the “2024 Senior Secured Notes”). Interest accrued at the rate of 8.75 % per annum and was payable semiannually on March 1 and September 1, and commenced March 1, 2021. Proceeds from the issuance were reduced by debt issuance costs, and include a purchase commitment discount of $ 25 million and a commitment fee of $ 15 million. On September 30, 2021, we repaid the principal amount outstanding on our 2024 Senior Secured Notes and accrued interest with proceeds from the issuance of the 2028 Senior Secured Notes described below and cash on hand. In addition, 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 discount. 2028 Senior Secured Notes On September 30, 2021, we issued 6.5 % Senior Secured Notes in aggregate principal amount of $ 500 million maturing September 15, 2028 (the “2028 Senior Secured Notes”). Interest accrues at the rate of 6.5 % per annum and is payable semiannually on September 15 and March 15 of each year, and commenced March 15, 2022. Proceeds from the issuance were reduced by debt issuance costs. The 2028 Senior Secured Notes and the related guarantees are secured by substantially all of the assets and properties of the Company and the other guarantors (on an effectively first-priority basis with respect to the priority collateral for the 2028 Senior Secured Notes, and on an effectively second-priority basis with respect to the priority collateral for the senior secured letter of credit agreement (now the “Credit Agreement”), in each case, subject to permitted liens). During the fourth quarter of 2022, we elected to repurchase $ 8 million in principal amount of our 2028 Senior Secured Notes. Subsequent to year-end, in January 2023, we repurchased an additional $ 11 million in principal amount of our 2028 Senior Secured Notes. 2030 Senior Notes On October 27, 2021, we issued 8.625 % Senior Notes in aggregate principal amount of $ 1.6 billion maturing April 30, 2030 (the “2030 Senior Notes”). Interest accrues at the rate of 8.625 % per annum and is payable semiannually on June 1 and December 1 of each year, and commenced June 1, 2022. On December 1, 2022, we modified our 2030 Senior Notes, as described earlier. Credit Agreement We had a senior secured letter of credit agreement dated as of December 13, 2019 (the “LC 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 October 17, 2022, we amended our LC Agreement (as amended and restated, the “Credit Agreement”) to assign the administrative agent role to Wells Fargo Bank National Association and to provide for a $ 370 million revolving credit agreement, comprised of $ 280 million for bid and performance letters of credit, and $ 90 million for revolving loans and bid, performance and financial letters of credit. The current revolving loan capacity is $ 45 million. The maturity date under the Credit Agreement is October 17, 2026 provided, that if more than $ 50 million of our Exit Notes are outstanding on such date, the maturity date will be August 30, 2024. The Credit Agreement also has (i) a minimum liquidity covenant of $ 250 million, (ii) a minimum interest coverage ratio of 2.00 to 1.00 for the testing period ended September 30, 2022 and 2.50 to 1.00 for each testing period thereafter and (iii) a maximum ratio of funded debt (net of unrestricted cash in excess of $ 400 million) to consolidated adjusted EBITDA of 4.00 to 1.00 for each testing period ending prior to June 30, 2023 and 3.50 to 1.00 for each testing period thereafter. The obligations under the Credit Agreement, as with our prior LC Agreement, are guaranteed by the Company and certain of our subsidiaries and secured by substantially all of the personal property of the Company and these subsidiaries. Weatherford International plc – 2022 Form 10-K | 63 Table of Contents Item 8 | Notes to the Consolidated Financial Statements On November 22, 2022, we amended our Credit Agreement to include (i) Weatherford Canada Ltd. as a borrower, and (ii) increased the total commitment to $ 400 million. On January 6, 2023, we further amended the Credit Agreement to clarify certain definitions related to fees associated with certain letters of credit. The material terms of the Credit Agreement are otherwise unchanged. At December 31, 2022 , we had approximately $ 195 million in outstanding letters of credit under the Credit Agreement and availability of $ 160 million. As of December 31, 2022 , we had $ 395 million of letters of credit outstanding, consisting of the $ 195 million mentioned above under the Credit Agreement and another $ 200 million under various uncommitted bi-lateral facilities (of which there was $ 199 million in cash collateral held and recorded in “Restricted Cash” on the Consolidated Balance Sheets). ABL Credit Agreement On the Effective Date, the Company entered into a senior secured asset-based lending agreement (the “ABL Credit Agreement”) in an aggregate amount of $ 450 million with the lenders party thereto and Wells Fargo Bank, N.A. as administrative agent. On August 28, 2020, we terminated the ABL Credit Agreement and recorded $ 15 million of unamortized deferred debt issuance costs in “Loss on Termination of ABL Credit Agreement” on our Consolidated Statements of Operations. Covenants for the Exit Notes, 2028 Senior Secured Notes, 2030 Senior Notes and Credit Agreement The indentures governing the Exit Notes, 2028 Senior Secured Notes and 2030 Senior Notes contain covenants that limit, among other things, our ability and the ability of certain of our subsidiaries, to: incur, assume or guarantee additional indebtedness; pay dividends or distributions on capital stock or redeem or repurchase capital stock; make investments; sell stock of our subsidiaries; transfer or sell assets; create liens; enter into transactions with affiliates; and enter into mergers or consolidations. The Company is subject to a $ 250 million minimum liquidity covenant and minimum interest coverage ratio and maximum ratio of funded debt as noted above under our latest amended Credit Agreement as defined in the applicable documents. In the event (1) the Exit Notes have an investment grade rating from both of Moody’s Investors Service (“Moody’s”), and Standard and Poor’s (“S&P’) and (2) no default has occurred and is continuing under the indenture, certain of these and other covenants will be suspended and cease to be in effect so long as the rating assigned by either Moody’s or S&P has not subsequently declined to below Baa3 or BBB- (or equivalent). The indentures also provide for certain customary events of default, including, among others, nonpayment of principal or interest, failure to pay final judgments in excess of a specified threshold, failure of a guarantee to remain in effect, bankruptcy and insolvency events, and cross acceleration, which would permit the principal, premium, if any, interest and other monetary obligations on all the then outstanding Exit Notes and 2028 Senior Secured Notes to be declared due and payable immediately. The following is a summary of scheduled debt maturities by year: (Dollars in millions) 2023 $ 45 2024 118 2025 13 2026 12 2027 3 Thereafter 2,081 Total Debt Maturities $ 2,272 Unamortized Debt Issuance and Discount $ ( 24 ) Total Debt Carrying Value $ 2,248 Weatherford International plc – 2022 Form 10-K | 64 Table of Contents Item 8 | Notes to the Consolidated Financial Statements 11 – Fair Value of Financial Instruments, Assets and Other Assets We estimate fair value at a price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal market for the asset or liability. Our valuation techniques require inputs that we categorize using a three-level hierarchy, from highest to lowest level of observable inputs. Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 inputs are quoted prices or other market data for similar assets and liabilities in active markets, or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based upon our own judgment and assumptions used to measure assets and liabilities at fair value. Classification of a financial asset or liability within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement. The fair values of our derivative instruments (see “Note 12 – Derivative Instruments”) and warrants (see “Note 16 – Shareholders’ Equity”), are both Level 2 valuations. Our other financial instruments include cash and cash equivalents, accounts receivable, accounts payable, short-term borrowings and long-term debt. The carrying values of these financial instruments (excluding long-term debt) approximate their fair value due to their short maturities. The fair value of our long-term debt fluctuates with changes in applicable interest rates among other factors. Fair value will exceed carrying value when the current market interest rate is lower than the interest rate at which the debt was originally issued and will be less than the carrying value when the current market interest rate is greater than the interest rate at which the debt was originally issued. The fair value of our long-term debt (excluding Finance Leases) in the following table is classified as Level 2 in the fair value hierarchy and is established based on observable inputs in less active markets. December 31, 2022 December 31, 2021 (Dollars in millions) Carrying Value Fair Value Carrying Value Fair Value 11.00 % Exit Notes due 2024 $ 125 $ 128 $ 300 $ 311 6.5 % Senior Secured Notes due 2028 482 482 488 528 8.625 % Senior Notes due 2030 1,586 1,544 1,584 1,660 Long-Term Debt (excluding Finance Leases) $ 2,193 $ 2,154 $ 2,372 $ 2,499 Non-recurring Fair Value Measurements See discussion at “Note 4 – Goodwill and Long-Lived Assets Impairment” and “Note 6 – Inventories, Net”. 12 – Derivative Instruments We enter into contracts to hedge our exposure to currency fluctuations in various foreign currencies. At December 31, 2022 and December 31, 2021, we had outstanding foreign currency forward contracts with notional amounts aggregating to $ 147 million and $ 349 million, respectively. The changes in fair value of the contracts are recorded in each period in “Other Expense, Net” on the accompanying Consolidated Statements of Operations. Weatherford International plc – 2022 Form 10-K | 65 Table of Contents Item 8 | Notes to the Consolidated Financial Statements 13 – Retirement and Employee Benefit Plans We have defined contribution plans covering certain employees. Contribution expenses related to these plans totaled $ 18 million, $ 16 million and $ 13 million for the years ended December 31, 2022, 2021 and 2020, respectively. We have defined benefit pension and other post-retirement benefit plans covering certain U.S. and international employees. Plan benefits are generally based on factors such as age, compensation levels and years of service. Net periodic benefit cost related to these plans totaled $ 4 million, $ 4 million, and $ 2 million for the years ended December 31, 2022, 2021 and 2020, respectively. The projected benefit obligations on a consolidated basis were $ 121 million and $ 207 million as of December 31, 2022 and December 31, 2021, respectively. The decrease year over year is due primarily to actuarial gains as a result of increased discount rates. The fair values of plan assets on a consolidated basis (determined primarily using Level 2 inputs) were $ 97 million and $ 160 million as of December 31, 2022 and December 31, 2021, respectively. The decrease year over year is due primarily to investment losses. As of December 31, 2022 , the net underfunded obligation consisted of $ 15 million of funded obligations recorded to “Other Non-current Assets” and $ 39 million of underfunded obligations substantially all recorded to “Other Non-current Liabilities” on our Consolidated Balance Sheets. As of December 31, 2021, the net underfunded obligation consisted of $ 16 million of funded obligations recorded to “Other Non-current Assets” and $ 63 million of underfunded obligations substantially all recorded to “Other Non-current Liabilities” on our Consolidated Balance Sheets. Additionally, the consolidated pre-tax amount in accumulated other comprehensive income (loss) as of December 31, 2022 and 2021, that has not yet been recognized as a component of net periodic benefit cost was a net gain of $ 19 million and net gain of $ 1 million, respectively. As mentioned above, increased discount rates were the primary driver of the overall gain in 2022. The weighted average assumption rates used for benefit obligations were as follows: Year Ended December 31, 2022 2021 Discount rate: United States Plans 4.75 % - 5.00 % 2.00 % - 2.75 % International Plans 2.84 % - 13.62 % 0.85 % - 8.47 % Rate of Compensation Increase: United States Plans — — International Plans 2.00 % - 7.22 % 2.00 % - 4.77 % During each of the years ended December 31, 2022 , 2021 and 2020, we made contributions and paid direct benefits of $ 5 million in connection with our defined benefit pension and other post-retirement benefit plans. In 2023, we expect to fund approximately $ 5 million related to those plans. Weatherford International plc – 2022 Form 10-K | 66 Table of Contents Item 8 | Notes to the Consolidated Financial Statements 14 – Disputes, Litigation and Legal Contingencies We are subject to lawsuits and claims arising out of the nature of our business. We have certain claims, disputes and pending litigation for which we do not believe a negative outcome is probable or for which we can only estimate a range of liability. It is possible, however, that an unexpected judgment could be rendered against us, or we could decide to resolve a case or cases, that would result in a liability that could be uninsured and beyond the amounts we currently have reserved and in some cases those losses could be material. If one or more negative outcomes were to occur relative to these cases, the aggregate impact to our financial condition could be material. Accrued litigation and settlements recorded in “Other Current Liabilities” on the accompanying Consolidated Balance Sheets as of December 31, 2022 and December 31, 2021 were $ 41 million and $ 40 million, respectively. GAMCO Shareholder Litigation On September 6, 2019, GAMCO Asset Management, Inc. (“GAMCO”), purportedly on behalf of itself and other similarly situated shareholders, filed a lawsuit asserting violations of the federal securities laws against certain then-current and former officers and directors of the Company. GAMCO alleges violations of Sections 10(b) and 20(b) of the Securities Exchange Act of 1934, and violations of Sections 11 and 15 of the Securities Act of 1933, as amended (the “Securities Act”) based on allegations that the Company and certain of its officers made false and/or misleading statements, and alleged non-disclosure of material facts, regarding our business, operations, prospects and performance. GAMCO seeks damages on behalf of purchasers of the Company’s ordinary shares from October 26, 2016 through May 10, 2019. GAMCO’s lawsuit was filed in the United States District Court for the Southern District of Texas, Houston Division, and it is captioned GAMCO Asset Management, Inc. v. McCollum, et al., Case No. 4:19-cv-03363. The District Court Judge appointed Utah Retirement Systems (“URS”) as Lead Plaintiff, and on March 16, 2020, URS filed its Amended Complaint. URS added the Company as a defendant but dropped the claims against non-officer board members and all the claims under the Securities Act. The defendants filed their motion to dismiss on May 18, 2020, and the Court granted the motion on May 14, 2021. URS appealed the Court’s Opinion on Dismissal to the Court of Appeals for the Fifth Circuit, and the parties are awaiting a decision. We cannot reliably predict the outcome of the claims, including the amount of any possible loss. Weatherford International plc – 2022 Form 10-K | 67 Table of Contents Item 8 | Notes to the Consolidated Financial Statements 15 – Share-Based Compensation Share-Based Plan The Weatherford International plc Third Amended and Restated 2019 Equity Incentive Plan, (“2019 Equity Plan”) authorizes the issuance of 8.6 million shares of common stock by the Compensation and Human Resources Committee of our Board of Directors in the form of options, share appreciation rights, restricted share awards, restricted share units (“RSUs”), performance-based restricted share units (“PSUs”), Phantom restricted share units (“Phantom RSUs”) and other share-based and performance-based awards to any employee, consultant, or non-employee director (“Grantees”). The provisions of each award vary based on the type of award granted. Awards made under the 2019 Equity Plan vest and settle in shares of newly issued common stock or cash. As of December 31, 2022, there were 3.3 million shares available for future grants. Share-Based Compensation Expense Share-based compensation expense was $ 25 million each for the years ended December 31, 2022 and 2021 and immaterial for 2020. Due to valuation allowances in the taxing jurisdictions of our Grantees, there is no related tax impact for each of the periods presented. Share-Based Award The Company has granted RSUs, PSUs, and Phantom RSUs under the 2019 Equity Plan. All awards require continued employment and generally vest over a one to three year vesting period. The Grantees do not have the rights of a shareholder under these awards until such date as the shares are issued. RSUs vest based on continued employment. The fair value of RSUs is determined based on the closing price of our shares on the date of grant. The total fair value, less forfeitures, is expensed over the vesting period. The weighted-average grant date fair value per unit (“WAGD FV”) of RSUs granted during 2022, 2021 and 2020 was $ 30.90 , $ 6.54 and $ 3.37 , respectively. The fair value of RSUs vested during 2022, 2021 and 2020 was $ 18 million, $ 2 million and immaterial , respectively. Cash used to settle RSUs in 2022 was $ 2 million. Cash was not used for 2021 or 2020. As of December 31, 2022, there was $ 12 million of unrecognized compensation expense related to RSUs, which is expected to be recognized over a weighted-average period of two years . PSUs vest based on continued employment and achievement of an established target. The actual number of PSU’s earned is subject to increase or decrease based on the performance goal multiplier and may range from 0 % to 200 %. The total fair value, less forfeitures, is expensed over the vesting period. Fair value of PSU’s depends on whether the established target is a performance or market condition. The fair value of PSUs subject to performance conditions defined solely by reference to the Company’s own operations is determined based on the closing price of our shares on the date of grant. Compensation cost is recognized only when the Company concludes it is probable the performance condition will be achieved and can increase, or decrease based on fluctuations in the Company’s forecasts. Weatherford International plc – 2022 Form 10-K | 68 Table of Contents Item 8 | Notes to the Consolidated Financial Statements The fair value of PSUs subject to the market performance of the Company’s shares is determined by utilizing an advanced option-pricing model. All compensation cost is recognized if the employment condition is fulfilled even if the market condition is never satisfied, as the likelihood of achieving the market condition is incorporated into the fair value of the award. The weighted average of assumptions used in the models were as follows: Year Ended December 31, 2022 2021 2020 Risk-Free rate 3.2 % 0.8 % n/a Dividend Yield n/a n/a n/a Expected Volatility 63.0 % 55.0 % n/a Expected Life (in years) 2.5 3.2 n/a The risk-free rate is obtained as of the grant date with terms matching the performance period. The dividend yield is based on historical dividend payments and expectations of management. The expected volatility is based on comparable companies’ volatility, and the expected life in years is based on the performance measurement period. The WAGD FV per unit of PSUs granted during 2022, 2021 and 2020 was $ 23.14 , $ 12.62 and $ 2.46 , respectively. The fair value of PSUs vested during 2021 was $ 2 million and nil for 2020 and 2022. As of December 31, 2022, there was $ 19 million of unrecognized compensation expense related to PSUs, which is expected to be recognized over a weighted-average period of two years . Phantom RSUs were only granted in 2021. Phantom RSUs vest, based on continued employment, over two years and can be settled in either cash or shares. The Company intends to settle all Phantom RSUs in cash, therefore they are recorded as a liability and remeasured based on current market value over the vesting period until settlement. Cash payout is calculated using the volume weighted price of the Company’s shares averaged for the 30 trading days immediately preceding the applicable vesting date, and was capped at certain predetermined amounts. During 2021, Phantoms RSUs were granted with a WAGD FV of $ 6.38 and the liability as of December 31, 2021 was $ 14 million, which was settled in cash in 2022. As of December 31, 2022, there was an immaterial amount of unrecognized compensation expense related to Phantom RSUs, due to achievement of the predetermined capped amounts in year one, which is expected to be settled in cash in 2023. A summary of activity for non-vested RSUs, PSUs, and Phantom RSUs outstanding (units in thousands) and their respective WAGD FV during 2022 is presented below. The table reflects the performance multiplier for PSUs at 100 %. RSU WAGD FV PSU WAGD FV Phantom RSU WAGD FV Non-Vested at December 31, 2021 1,065 6.19 1,924 12.74 1,239 6.53 Granted 609 30.90 618 23.14 — — Vested ( 679 ) 6.37 — — ( 465 ) 6.55 Cancelled or Forfeited ( 77 ) 22.86 ( 241 ) 18.02 ( 757 ) 6.34 Non-Vested at December 31, 2022 918 21.05 2,301 14.98 17 14.50 Weatherford International plc – 2022 Form 10-K | 69 Table of Contents Item 8 | Notes to the Consolidated Financial Statements 16 – Shareholders’ Equity There were no material changes in our ordinary shares issued as of December 31, 2022 and 2021. On the Effective Date, the Company issued warrants allowing the holders to purchase up to an aggregate of 7,777,779 ordinary shares in the Company, par value $ 0.001 , at an exercise price of $ 99.96 per ordinary share. The warrants are equity classified and, upon issuance, had a value of $ 31 million, which was recorded in “Capital in Excess of Par Value.” The warrant fair value was a Level 2 valuation and was estimated using the Black Scholes valuation model. Inputs to the model included Weatherford’s share price, volatility of our share price, and the risk-free interest rate. The warrants are exercisable until the “Expiration Date” of which is the earlier of (i) December 13, 2023 and (ii) the date of consummation of any liquidity event resulting in the sale or exchange or a liquidation, dissolution or winding down of all or substantially all of the equity interests of the Company to one or more third parties. All unexercised warrants will expire, and the rights of the warrant holders to purchase ordinary shares will terminate, on the Expiration Date. During 2022 and 2021, an immaterial number of warrants were exercised. Accumulated Other Comprehensive Loss The following table presents the changes in our accumulated other comprehensive loss by component: (Dollars in millions) Foreign Currency Translation Defined Benefit Pension Total Balance at December 31, 2020 $ ( 31 ) $ ( 12 ) $ ( 43 ) Other Comprehensive (Loss) Income ( 5 ) 13 8 Balance at December 31, 2021 ( 36 ) 1 ( 35 ) Other Comprehensive (Loss) Income ( 5 ) 18 13 Balance at December 31, 2022 $ ( 41 ) $ 19 $ ( 22 ) Weatherford International plc – 2022 Form 10-K | 70 Table of Contents Item 8 | Notes to the Consolidated Financial Statements 17 – Income (Loss) per Share Basic income (loss) per share for all periods presented equals net income (loss) divided by our weighted average shares outstanding during the period. Diluted income (loss) per share is computed by dividing net income (loss) by our weighted average shares outstanding during the period including potential dilutive ordinary shares. Antidilutive shares represent potentially dilutive securities which are excluded from the computation of diluted income or loss per share as their impact was antidilutive. These include potential ordinary shares for restricted share units, performance share units, phantom restricted share units, and outstanding warrants. Our basic and diluted weighted average shares outstanding for periods presented with net loss are equivalent as the impact of potential dilutive securities is antidilutive. A reconciliation of the number of shares used for the basic and diluted income (loss) per share calculation was as follows: Year Ended December 31, (Shares in millions) 2022 2021 2020 Net Income (Loss) Attributable to Weatherford $ 26 $ ( 450 ) $ ( 1,921 ) Basic Weighted Average Shares Outstanding 71 70 70 Dilutive Effect of Awards Granted in Stock Incentive Plans 1 — — Diluted Weighted Average Shares Outstanding 72 70 70 Antidilutive Shares 8 10 8 Basic Income (Loss) Per Share Attributable to Weatherford $ 0.37 $ ( 6.43 ) $ ( 27.44 ) Diluted Income (Loss) Per Share Attributable to Weatherford $ 0.36 $ ( 6.43 ) $ ( 27.44 ) Weatherford International plc – 2022 Form 10-K | 71 Table of Contents Item 8 | Notes to the Consolidated Financial Statements 18 – Income Taxes 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. The relationship between our pre-tax income or loss and our income tax provision or benefit varies from period to period as a result of various factors which include changes in total pre-tax income or loss, the jurisdictions in which our income is earned, the tax laws in those jurisdictions and in our operating structure. Our income tax provision consisted of the following: Year Ended December 31, (Dollars in millions) 2022 2021 2020 Total Current Provision $ ( 83 ) $ ( 96 ) $ ( 90 ) Total Deferred (Provision) Benefit ( 4 ) 10 5 Income Tax Provision $ ( 87 ) $ ( 86 ) $ ( 85 ) The difference between the Irish income tax provision and the consolidated income tax provision is analyzed below: Year Ended December 31, (Dollars in millions) 2022 2021 2020 Irish Income Tax (Provision) Benefit Tax Rate of 25% $ ( 35 ) $ 86 $ 454 Tax Provision on Operating Earnings/Losses Subject to Rates Different than the Irish Income Tax Rate ( 155 ) ( 189 ) ( 361 ) Tax (Provision) Benefit on Swiss Loss from internal liquidation of subsidiary ( 141 ) 124 179 Decrease (Increase) in Valuation Allowance attributed to Swiss Loss 141 ( 124 ) ( 179 ) Decrease (Increase) in Valuation Allowance on Operating Earnings/Losses 64 52 ( 151 ) Change in Uncertain Tax Positions 39 ( 35 ) ( 27 ) Income Tax Provision $ ( 87 ) $ ( 86 ) $ ( 85 ) Our income tax provisions generally do not correlate to our consolidated income (loss) before tax. Our income taxes provisions are primarily driven by profits in certain jurisdictions, deemed profit countries and withholding taxes on intercompany and third-party transactions that do not directly correlate to ordinary income or loss. Certain charges and impairments recognized do not result in significant tax benefit as a result of being attributed to a non-income tax jurisdiction or our inability to forecast realization of the tax benefit of such losses. Deferred tax assets and liabilities are recognized for the estimated future tax effects of temporary differences between the tax basis of an asset or liability and its reported amount in the Consolidated Financial Statements. The measurement of deferred tax assets and liabilities is based on enacted tax laws and rates currently in effect in each of the jurisdictions in which we have operations. Weatherford International plc – 2022 Form 10-K | 72 Table of Contents Item 8 | Notes to the Consolidated Financial Statements The components of the net deferred tax asset were as follows: December 31, December 31, (Dollars in millions) 2022 2021 Deferred Tax Assets: Net Operating Losses Carryforwards $ 751 $ 929 Unused Recognized Built in Losses 43 50 Accrued Liabilities and Reserves 143 186 Tax Credit Carryforwards 11 9 Employee Benefits 29 30 Property, Plant and Equipment 158 118 Inventory 38 52 U.S. Interest Deferral 57 13 State Deferred 50 50 Other Differences between Financial and Tax Basis 89 139 Valuation Allowance ( 1,300 ) ( 1,527 ) Total Deferred Tax Assets 69 49 Deferred Tax Liabilities: Intangible Assets ( 28 ) ( 35 ) Other Differences between Financial and Tax Basis — ( 3 ) Total Deferred Tax Liabilities ( 28 ) ( 38 ) Net Deferred Tax Asset $ 41 $ 11 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. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income in the appropriate tax jurisdiction during the periods in which those deferred tax assets would be deductible. 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, 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, in making this assessment. The valuation allowance increased (decreased) by $( 227 ) million, $ 28 million and $ 333 million in 2022, 2021, and 2020, respectively. Tax expense (benefit) related to the increase (decrease) in the valuation allowance was $( 205 ) million, $ 72 million, and $ 330 million in 2022, 2021 and 2020, respectively. The tax expense (benefit) in the valuation allowance is primarily attributable to the release of valuation allowance of $ 35 million and $ 7 million for 2022 and 2021, respectively, where deferred tax assets are now considered more likely than not to be realized in the future, and the Switzerland liquidation transaction discussed below. The remaining relates to the utilization of net operating losses previously not expected to be realized against operating earnings, $( 29 ) million and $( 45 ) million in 2022 and 2021, respectively. The 2020 expense is primarily attributable to net operating losses not expected to be realized and the Switzerland transaction. Other increase (decreases) to the valuation allowance also includes foreign currency transactions of $( 22 ) million, $( 44 ) million, and $ 3 million in 2022, 2021 and 2020, respectively. Deferred income taxes generally have not been recognized on the cumulative undistributed earnings of our non-Irish subsidiaries because they are considered to be indefinitely reinvested. Distribution of these earnings in the form of dividends or otherwise may result in a combination of income and withholding taxes payable in various countries. As of December 31, 2022 , the pool of positive undistributed earnings of our non-Irish subsidiaries that are considered indefinitely reinvested and may be subject to tax if distributed amounts to approximately $ 1.3 billion. Due to complexities in the tax laws and the manner of repatriation, it is not practicable to estimate the unrecognized amount of deferred income taxes and the related dividend withholding taxes associated with these undistributed earnings. Weatherford International plc – 2022 Form 10-K | 73 Table of Contents Item 8 | Notes to the Consolidated Financial Statements At December 31, 2022 , we had approximately $ 3.8 billion of net operating losses (“NOLs”) in various jurisdictions. Our non-indefinite loss carryforwards, if not utilized, will mostly expire for U.S. subsidiaries from 2030 through 2037 and at various dates from 2023 through 2042 for non-U.S. subsidiaries. Upon emergence from bankruptcy in December 2019, our U.S. subsidiaries experienced an ownership change as the Company’s emergence was considered an “ownership change” for purposes of Internal Revenue Code section 382. The Internal Revenue Code sections 382 and 383 impose limitations on the ability of a company to utilize tax attributes after experiencing an “ownership change.” As a result, we estimated our annual limitation is approximately $ 23 million against the utilization of our U.S. loss carryforwards and other tax attributes, including unused recognized built-in losses and U.S. interest deferral. Upon emergence, we estimated that the maximum U.S. NOLs available for utilization in the future was $ 713 million as of December 31, 2019. In 2021, we executed a liquidation transaction of one of our Swiss holding companies which resulted in the forfeiture of impairment losses of $ 1.3 billion generated in 2020. In addition, the liquidation transaction resulted in approximately $ 6.2 billion of tax losses (NOLs) in Switzerland of which $ 4 billion was deemed worthless and excluded from the deferred tax table, and $ 2.2 billion was recorded as an NOL and included in the table as management expects to utilize those NOLs on our future tax returns. However, in addition to recording a deferred tax asset of $ 303 million related to the $ 2.2 billion tax losses, we recorded a valuation allowance against the full $ 303 million because it will offset future income that is otherwise exempt from tax. A tabular reconciliation of the total amounts of uncertain tax positions at the beginning and end of the period is as follows: Year Ended December 31, (Dollars in millions) 2022 2021 2020 Balance at Beginning of Year $ 235 $ 222 $ 214 Additions as a Result of Tax Positions Taken During a Prior Period 14 23 9 Reductions as a Result of Tax Positions Taken During a Prior Period ( 15 ) ( 8 ) ( 4 ) Additions as a Result of Tax Positions Taken During the Current Period 11 12 21 Reductions Relating to Settlements with Taxing Authorities ( 36 ) ( 5 ) ( 2 ) Reductions as a Result of a Lapse of the Applicable Statute of Limitations ( 11 ) ( 2 ) ( 7 ) Foreign Exchange Effects ( 7 ) ( 7 ) ( 9 ) Balance at End of Year $ 191 $ 235 $ 222 Substantially all of the uncertain tax positions, if released in future periods, would impact our effective tax rate. Within the total balance is $ 38 million and $ 76 million as of December 31, 2022 and 2021, respectively, that would be offset by net operating losses and other tax attributes if settled. Our income tax provision includes penalties and interest expense (benefit) on uncertain tax positions of $( 2 ) million, $ 17 million and $ 11 million for years ended December 31, 2022 , 2021, and 2020, respectively. The benefit of $( 2 ) million in 2022 includes $( 19 ) million of interest and penalty release related to benefit from previously uncertain tax positions. The amounts in the table above exclude cumulative accrued interest and penalties of $ 98 million and $ 104 million at December 31, 2022 and 2021 respectively, which are included in other non-current liabilities. Weatherford International plc – 2022 Form 10-K | 74 Table of Contents Item 8 | Notes to the Consolidated Financial Statements We are subject to income tax in many of the approximately 75 countries where we operate. As of December 31, 2022 , the following table summarizes the tax years that remain subject to examination for the major jurisdictions in which we operate: Tax Jurisdiction Tax Years under Examination Argentina 2012 - 2022 Canada 2014 - 2022 Mexico 2012 - 2022 Russia 2019 - 2022 Saudi Arabia 2018 - 2022 Switzerland 2014 - 2022 United States (Federal) 2019 - 2022 We are continuously under tax examination in various jurisdictions and cannot predict the timing or outcome regarding the resolutions or if they will have a material impact on our financial statements. As of December 31, 2022 , we anticipate that it is reasonably possible that the amount of uncertain tax positions may decrease by up to $ 4 million in the next twelve months due to expiration of statutes of limitations, settlements and/or conclusions of tax examinations. Weatherford International plc – 2022 Form 10-K | 75 Table of Contents Item 9 | Changes in and Disagreement with Accountants on Accounting and Financial Disclosure Item 9. Changes in and Disagreement with Accountants on Accounting and Financial Disclosure None.