Weatherford International plc 10-Q

Item 1. Financial Statements. WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended March 31, (Dollars and shares in millions, except per share amounts) 2023 2022 Revenues: Services $ 741 $ 593 Products 445 345 Total Revenues 1,186 938 Costs and Expenses: Cost of Services 450 385 Cost of Products 340 297 Research and Development 26 21 Selling, General and Administrative 190 178 Restructuring Charges — 20 Other Charges (Credits) ( 5 ) 19 Total Costs and Expenses 1,001 920 Operating Income 185 18 Interest Expense, Net ( 31 ) ( 48 ) Other Expense, Net ( 35 ) ( 16 ) Income (Loss) Before Income Taxes 119 ( 46 ) Income Tax Provision ( 38 ) ( 28 ) Net Income (Loss) 81 ( 74 ) Net Income Attributable to Noncontrolling Interests 9 6 Net Income (Loss) Attributable to Weatherford $ 72 $ ( 80 ) Basic Income (Loss) per Share $ 1.00 $ ( 1.14 ) Basic Weighted Average Shares Outstanding 72 70 Diluted Income (Loss) per Share $ 0.97 $ ( 1.14 ) Diluted Weighted Average Shares Outstanding 74 70 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 2 Table of Contents WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) Three Months Ended March 31, (Dollars in millions) 2023 2022 Net Income (Loss) $ 81 $ ( 74 ) Foreign Currency Translation Adjustments 3 — Comprehensive Income (Loss) 84 ( 74 ) Comprehensive Income Attributable to Noncontrolling Interests 9 6 Comprehensive Income (Loss) Attributable to Weatherford $ 75 $ ( 80 ) The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 3 Table of Contents WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars and shares in millions, except par value) March 31, 2023 December 31, 2022 (Unaudited) Assets: Cash and Cash Equivalents $ 833 $ 910 Restricted Cash 150 202 Accounts Receivable, Net of Allowance for Credit Losses of $ 21 at March 31, 2023 and $ 26 at December 31, 2022 1,088 989 Inventories, Net 719 689 Other Current Assets 253 253 Total Current Assets 3,043 3,043 Property, Plant and Equipment, Net of Accumulated Depreciation of $ 801 at March 31, 2023 and $ 773 at December 31, 2022 919 918 Intangible Assets, Net of Accumulated Amortization of $ 520 at March 31, 2023 and $ 480 at December 31, 2022 474 506 Operating Lease Assets 130 115 Other Non-Current Assets 143 138 Total Assets $ 4,709 $ 4,720 Liabilities: Current Portion of Long-term Debt $ 120 $ 45 Accounts Payable 502 460 Accrued Salaries and Benefits 271 367 Income Taxes Payable 125 141 Current Portion of Operating Lease Liabilities 44 44 Other Current Liabilities 449 413 Total Current Liabilities 1,511 1,470 Long-term Debt 2,067 2,203 Operating Lease Liabilities 130 117 Non-current Taxes Payable 261 251 Other Non-Current Liabilities 154 128 Total Liabilities $ 4,123 $ 4,169 Shareholders’ Equity: Ordinary Shares - Par Value $ 0.001 ; Authorized 1,356 shares, Issued and Outstanding 72 shares at March 31, 2023 and 71 at December 31, 2022 $ — $ — Capital in Excess of Par Value 2,885 2,928 Retained Deficit ( 2,299 ) ( 2,371 ) Accumulated Other Comprehensive Loss ( 19 ) ( 22 ) Weatherford Shareholders’ Equity 567 535 Noncontrolling Interests 19 16 Total Shareholders’ Equity 586 551 Total Liabilities and Shareholders’ Equity $ 4,709 $ 4,720 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 4 Table of Contents WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended March 31, (Dollars in millions) 2023 2022 Cash Flows From Operating Activities: Net Income (Loss) $ 81 $ ( 74 ) Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by (Used in) Operating Activities: Depreciation and Amortization 80 87 Asset Write-downs and Other Charges — 12 Inventory Charges 11 15 Gain on Disposition of Assets ( 5 ) ( 5 ) Deferred Income Tax Provision 18 3 Share-Based Compensation 9 7 Changes in Operating Assets and Liabilities, Net: Accounts Receivable ( 96 ) ( 51 ) Inventories ( 45 ) ( 31 ) Accounts Payable 64 7 Other Assets and Liabilities, Net ( 33 ) ( 34 ) Net Cash Provided by (Used in) Operating Activities 84 ( 64 ) Cash Flows From Investing Activities: Capital Expenditures for Property, Plant and Equipment ( 64 ) ( 20 ) Proceeds from Disposition of Assets 7 20 Other Investing Activities ( 7 ) 9 Net Cash Provided by (Used in) Investing Activities ( 64 ) 9 Cash Flows From Financing Activities: Repayments of Long-term Debt ( 66 ) ( 4 ) Noncontrolling Interest Dividends ( 6 ) — Tax Remittance on Equity Awards Vested ( 52 ) ( 1 ) Other Financing Activities ( 3 ) — Net Cash Used in Financing Activities ( 127 ) ( 5 ) Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash ( 22 ) 3 Net Decrease in Cash, Cash Equivalents and Restricted Cash ( 129 ) ( 57 ) Cash, Cash Equivalents and Restricted Cash at Beginning of Period 1,112 1,113 Cash, Cash Equivalents and Restricted Cash at End of Period $ 983 $ 1,056 Supplemental Cash Flow Information: Interest Paid $ 18 $ 17 Income Taxes Paid, Net of Refunds $ 29 $ 19 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 5 Table of Contents WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1 – Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements of Weatherford International plc (the “Company,” “Weatherford,” “we,” “us,” or “our”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, certain information and disclosures normally included in our annual consolidated financial statements have been condensed or omitted. Therefore, these unaudited Condensed Consolidated Financial Statements should be read in conjunction with our audited Consolidated Financial Statements included in our Form 10-K for the year ended December 31, 2022 (“2022 Form 10-K”). The preparation of the Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenue and expenses during the reporting period. Ultimate results could differ from our estimates. In the opinion of management, the Condensed Consolidated Financial Statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary by management to fairly state the results of operations, financial position and cash flows of Weatherford and its subsidiaries for the periods presented and are not necessarily indicative of the results that may be expected for a full year. Our financial statements have been prepared on a consolidated basis. Under this basis, our financial statements consolidate all wholly owned subsidiaries and controlled joint ventures. All intercompany accounts and transactions have been eliminated. Summary of Significant Accounting Policies Please refer to “Note 1 – Summary of Significant Accounting Policies” of our Consolidated Financial Statements from our 2022 Form 10-K for the discussion on our significant accounting policies. Certain reclassifications have been made to these Condensed Consolidated Financial Statements and accompanying footnotes for the three months ended March 31, 2022 to conform to the presentation for the three months ended March 31, 2023. New Accounting Standards All new accounting pronouncements that have been issued but not yet effective are currently being evaluated and at this time are not expected to have a material impact on our financial position or results of operations. 2 – Segment Information Financial information by segment is summarized below. The accounting policies of the segments are the same as those described in the summary of significant accounting policies as presented in our 2022 Form 10-K. We have three reportable segments: (1) Drilling and Evaluation “DRE”, (2) Well Construction and Completions “WCC”, and (3) Production and Intervention “PRI”. 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 results from non-core business activities, corporate and other expenses (overhead support and centrally managed or shared facilities costs) that do not individually meet the criteria for segment reporting. 6 Table of Contents Three Months Ended March 31, (Dollars in millions) 2023 2022 Revenues: DRE Revenues $ 372 $ 292 WCC Revenues 421 344 PRI Revenues 349 286 All Other 44 16 Total Revenues $ 1,186 $ 938 Operating Income: DRE Segment Adjusted EBITDA $ 108 $ 59 WCC Segment Adjusted EBITDA 96 67 PRI Segment Adjusted EBITDA 68 39 Corporate and Other ( 3 ) ( 14 ) Depreciation and Amortization ( 80 ) ( 87 ) Share-Based Compensation ( 9 ) ( 7 ) Restructuring Charges — ( 20 ) Other (Charges) Credits (a) 5 ( 19 ) Operating Income $ 185 $ 18 (a) Other (charges) credits relate to miscellaneous charges and credits including write-downs of certain assets. 3 – Revenues Disaggregated Revenue 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 receive 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. 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 were $ 33 million for the three months ended March 31, 2023 and $ 31 million for the three months ended March 31, 2022. The following table disaggregates our revenues from contracts with customers by geographic region and includes equipment rental revenues. North America in the table below consists of the U.S. and Canada. Three Months Ended March 31, (Dollars in millions) 2023 2022 Revenues by Geographic Areas: Middle East/North Africa/Asia $ 376 $ 310 North America 286 238 Latin America 317 227 Europe/Sub-Sahara Africa/Russia 207 163 Total Revenues $ 1,186 $ 938 7 Table of Contents Contract Balances The timing of our revenue recognition, billings and cash collections results in the recording of accounts receivable, contract assets, and contract liabilities. The following table summarizes these balances as of March 31, 2023 and December 31, 2022: (Dollars in millions) March 31, 2023 December 31, 2022 Receivables for Product and Services in Accounts Receivable, Net $ 1,052 $ 954 Receivables for Equipment Rentals in Account Receivable, Net $ 36 $ 35 Accounts Receivable, Net $ 1,088 $ 989 Contract Assets in Other Current Assets $ 35 $ 39 Contract Assets in Other Non-Current Assets $ 25 $ 21 Contract Liabilities in Other Current Liabilities (a) $ 52 $ 54 Contract Liabilities in Other Non-Current Liabilities $ 2 $ — (a) Revenues recognized during the three months ended March 31, 2023 and March 31, 2022 that were included in the contract liabilities balance at the beginning of the year was approximately $ 20 million and $ 22 million, respectively. 4 – Restructuring Charges Restructuring charges were zero and $ 20 million in the three months ended March 31, 2023 and in the three months ended March 31, 2022, respectively, and presented as “Restructuring Charges” on the accompanying Condensed Consolidated Statements of Operations. The 2022 charges were primarily related to the launch of a multi-year footprint consolidation and workforce efficiency initiative aimed at improving fulfillment operations and included $ 14 million in severance and $ 6 million in asset retirement obligations. Restructuring liabilities were $ 21 million and $ 25 million as of March 31, 2023 and December 31, 2022, respectively, of which $ 12 million and $ 16 million are recorded in “Other Current Liabilities” as of March 31, 2023 and December 31, 2022, respectively, and $ 9 million are recorded in “Other Non-current Liabilities” as of both March 31, 2023 and December 31, 2022, on the accompanying Consolidated Balance Sheets. A change in liabilities will include restructuring charges, primarily offset by cash payments. The following table presents total restructuring charges by segment and All Other in the three months ended March 31, 2023 and 2022: Three Months Ended March 31, (Dollars in millions) 2023 2022 DRE $ — $ 5 WCC — 7 PRI — 5 All Other — 3 Total Restructuring Charges $ — $ 20 8 Table of Contents 5 – Inventories, Net Inventories, net of reserves of $ 131 million and $ 129 million as of March 31, 2023 and December 31, 2022, respectively, are presented by category in the table below: (Dollars in millions) March 31, 2023 December 31, 2022 Finished Goods $ 616 $ 601 Work in Process and Raw Materials, Components and Supplies 103 88 Inventories, Net $ 719 $ 689 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 Condensed Consolidated Statements of Operations: Three Months Ended March 31, (Dollars in millions) 2023 2022 Inventory Charges in “Cost of Products” $ 11 $ 11 Inventory Charges in “Other Charges (Credits)” — 4 Total Inventory Charges $ 11 $ 15 6 – Intangibles, Net The components of intangible assets, net were as follows: (Dollars in millions) March 31, 2023 December 31, 2022 Developed and Acquired Technology, Net of Accumulated Amortization of $ 389 at March 31, 2023 and $ 359 at December 31, 2022 $ 210 $ 232 Trade Names, Net of Accumulated Amortization of $ 131 at March 31, 2023 and $ 121 at December 31, 2022 264 274 Intangible Assets, Net of Accumulated Amortization of $ 520 at March 31, 2023 and $ 480 at December 31, 2022 $ 474 $ 506 Amortization expense was $ 40 million and $ 39 million for the three months ended March 31, 2023 and March 31, 2022, respectively, and is reported in “Selling, General and Administrative” on our Condensed Consolidated Statements of Operations. 9 Table of Contents 7 – Borrowings and Other Debt Obligations (Dollars in millions) March 31, 2023 December 31, 2022 Current Portion of Finance Leases $ 15 $ 14 Current Portion of 6.50 % Senior Secured Notes due 2028 “2028 Senior Secured Notes” — 11 Current Portion of 11.00 % Exit Notes due 2024 “Exit Notes” 105 20 Current Portion of Long-term Debt $ 120 $ 45 11.00 % Exit Notes due 2024 “Exit Notes” $ — $ 105 6.50 % Senior Secured Notes due 2028 “2028 Senior Secured Notes” 441 471 8.625 % Senior Notes due 2030 “2030 Senior Notes” 1,586 1,586 Long-term Portion Finance Leases 40 41 Long-term Debt $ 2,067 $ 2,203 Exit Notes On December 13, 2019, Weatherford International Ltd., a Bermuda exempted company (“Weatherford Bermuda”) issued 11.00 % senior unsecured notes in aggregate principal amount of $ 2.1 billion maturing December 1, 2024 (the “Exit Notes”). Interest is payable semiannually on June 1 and December 1 of each year. The Exit Notes have been refinanced or redeemed in the years since issuance and in the first quarter of 2023, we redeemed $ 20 million in principal, leaving a remaining unpaid principal of $ 105 million at March 31, 2023, which also represents the carrying value. On April 20, 2023, we announced our intent to redeem the remaining principal of $ 105 million of our Exit Notes for a redemption price of 102.75 % on May 22, 2023, plus accrued and unpaid interest. 2028 Senior Secured Notes On September 30, 2021, Weatherford Bermuda issued 6.50 % senior secured notes in aggregate principal amount of $ 500 million maturing September 15, 2028 (the “2028 Senior Secured Notes”). Interest is payable semiannually on September 15 and March 15 of each year, and commenced on March 15, 2022. In the first quarter of 2023, we repurchased $ 42 million in principal of our 2028 Senior Secured Notes. At March 31, 2023, the carrying value represents the remaining unpaid principal of $ 450 million offset by unamortized deferred issuance cost of $ 9 million. On April 19, 2023, Weatherford Bermuda, the Company and Weatherford International, LLC, a Delaware limited liability company (“Weatherford Delaware”), entered into a Second Supplemental Indenture relating to the 2028 Senior Secured Notes which amended the “Limitation on Restricted Payments” covenant to permit the purchase, repurchase, redemption, defeasance or other acquisition or retirement of the Exit Notes. 2030 Senior Notes On October 27, 2021, Weatherford Bermuda issued 8.625 % senior notes in aggregate principal amount of $ 1.6 billion maturing April 30, 2030 (the “2030 Senior Notes”). Interest is payable semiannually on June 1 and December 1 of each year, and commenced on June 1, 2022. At March 31, 2023, the carrying value represents the remaining unpaid principal of $ 1.6 billion offset by unamortized deferred issuance cost of $ 14 million. Credit Agreement Weatherford Bermuda, Weatherford Delaware, and Weatherford Canada Ltd. (“Weatherford Canada”), together, as borrowers, and the Company as parent, have an amended and restated credit agreement (the “Credit Agreement”). The Credit Agreement allows for a total commitment amount of $ 400 million maturing on October 17, 2026 (subject to a $ 250 million minimum liquidity covenant and a minimum interest coverage ratio and maximum ratio of funded debt), provided that no more than $ 50 million of our Exit Notes are outstanding on August 30, 2024 (otherwise the maturity date becomes August 30, 2024). On March 24, 2023, we further amended the Credit Agreement to permit unlimited prepayments and other redemptions of 10 Table of Contents indebtedness subject to (i) the ratio of funded debt (net of unrestricted cash in excess of $ 400 million) to consolidated adjusted EBITDA as defined in the Credit Agreement, not exceeding 2.50 to 1.00, (ii) no default or event of default existing and (iii) aggregate proforma liquidity in the event of a debt reduction equaling or exceeding $ 300 million (which previously was $ 350 million). The material terms of the Credit Agreement are otherwise unchanged. The obligations under the Credit Agreement are guaranteed by the Company and certain of our subsidiaries and secured by substantially all of the personal property of the Company and those subsidiaries. As of March 31, 2023, we had $ 405 million of letters of credit outstanding, consisting of the $ 253 million under the Credit Agreement and another $ 152 million under various uncommitted bi-lateral facilities (of which there was $ 146 million in cash collateral held and recorded in “Restricted Cash” on the Condensed Consolidated Balance Sheets). At March 31, 2023, we had $ 147 million remaining letters of credit available under our Credit Agreement. Accrued Interest As of March 31, 2023 and December 31, 2022, we had accrued interest of approximately $ 51 million and $ 22 million, respectively, in “Other Current Liabilities” primarily related to the Exit Notes, 2028 Senior Secured Notes and 2030 Senior Notes. Fair Value The carrying value of our short-term borrowings, when applicable, approximates 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 market rate is greater than the interest rate at which the debt was originally issued. The fair value of our long-term debt is classified as Level 2 in the fair value hierarchy and is established based on observable inputs in less active markets. The table below presents the fair value and carrying value of our long-term debt (excluding finance leases). March 31, 2023 December 31, 2022 (Dollars in millions) Carrying Value Fair Value Carrying Value Fair Value 11.00 % Exit Notes due 2024 $ 105 $ 108 $ 125 $ 128 6.50 % Senior Secured Notes due 2028 441 452 482 482 8.625 % Senior Notes due 2030 1,586 1,626 1,586 1,544 Long-Term Debt (excluding Finance Leases) $ 2,132 $ 2,186 $ 2,193 $ 2,154 11 Table of Contents 8 – 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 Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022 were $ 44 million and $ 41 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 continuing to await a decision. We cannot reliably predict the outcome of the claims, including the amount of any possible loss. 12 Table of Contents 9 – Shareholders’ Equity The change in shares issued and outstanding on our Condensed Consolidated Balance Sheets from 71 million as of December 31, 2022 to 72 million as of March 31, 2023, was due to equity awards granted, vested, and exercised, net of shares withheld for taxes. The following summarizes our shareholders’ equity activity for the three months ended March 31, 2023 and 2022: (Dollars in millions) Capital in Excess of Par Value Retained Deficit Accumulated Other Comprehensive Income (Loss) Noncontrolling Interests Total Shareholders’ Equity Balance at December 31, 2022 $ 2,928 $ ( 2,371 ) $ ( 22 ) $ 16 $ 551 Net Income — 72 — 9 81 Dividends to Noncontrolling Interests — — — ( 6 ) ( 6 ) Equity Awards Granted, Vested and Exercised, Net of Shares Withheld for Taxes ( 43 ) — — — ( 43 ) Other Comprehensive Income — — 3 — 3 Balance at March 31, 2023 $ 2,885 $ ( 2,299 ) $ ( 19 ) $ 19 $ 586 Balance at December 31, 2021 $ 2,904 $ ( 2,397 ) $ ( 35 ) $ 24 $ 496 Net Income (Loss) — ( 80 ) — 6 ( 74 ) Equity Awards Granted, Vested and Exercised, Net of Shares Withheld for Taxes 4 — — — 4 Balance at March 31, 2022 $ 2,908 $ ( 2,477 ) $ ( 35 ) $ 30 $ 426 The following table presents the changes in our accumulated other comprehensive income (loss) by component for the three months ended March 31, 2023 and 2022: (Dollars in millions) Currency Translation Adjustment Defined Benefit Pension Total Balance at December 31, 2022 $ ( 41 ) $ 19 $ ( 22 ) Other Comprehensive Income 3 — 3 Balance at March 31, 2023 $ ( 38 ) $ 19 $ ( 19 ) Balance at December 31, 2021 $ ( 36 ) $ 1 $ ( 35 ) Other Comprehensive Income — — — Balance at March 31, 2022 $ ( 36 ) $ 1 $ ( 35 ) 13 Table of Contents 10 – 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 issuable for restricted share units, performance share units, phantom restricted share units, and outstanding warrants. Our basic and dilutive weighted average shares outstanding for periods presented with a net loss are equivalent as the inclusion 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: Three Months Ended March 31, (Dollars and shares in millions, except per share amounts) 2023 2022 Net Income (Loss) Attributable to Weatherford $ 72 $ ( 80 ) Basic Weighted Average Shares Outstanding 72 70 Dilutive Effect of Awards Granted in Stock Incentive Plans 2 — Diluted Weighted Average Shares Outstanding 74 70 Antidilutive Shares 9 11 Basic Income (Loss) Per Share Attributable to Weatherford $ 1.00 $ ( 1.14 ) Diluted Income (Loss) Per Share Attributable to Weatherford $ 0.97 $ ( 1.14 ) 11 – Income Taxes Effective for the three months ended March 31, 2023, the Company changed to calculating the income tax provision using the estimated annual effective tax rate method in accordance with Accounting Standards Codification “ASC” 740 - Income Taxes and is no longer applying the exception, which allowed the use of the year-to-date effective tax rate method. The Company believes the change is appropriate as it is able to reliably calculate the estimated annual effective tax rate due to sustained profitability and confidence in future earnings. For the three months ended March 31, 2022, we determined our quarterly tax provision using the year-to-date effective tax rate method because the estimated annual approach was not reliable given that small changes in estimated ordinary annual income resulted in significant changes in our estimated annual effective tax rate. In the three months ended March 31, 2023, we recognized tax expense of $ 38 million compared to the three months ended March 31, 2022 where we recognized tax expense of $ 28 million. The relationship between our pre-tax income or loss and our income tax provision or benefit varies from period to period due to 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. 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 residents for income tax purposes. Our income tax provisions are primarily driven by income in certain jurisdictions, deemed profit countries and withholding taxes on intercompany and third-party transactions that do not directly correlate to ordinary income or loss and other adjustments. 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. This is partially offset by the utilization of previously unbenefited deferred tax assets, such as net operating loss carryforwards. We routinely undergo tax examination in various jurisdictions. We cannot predict the timing or outcome regarding resolution of these tax examinations or if they will have a material impact on our financial statements. As of March 31, 2023, we anticipate that it is reasonably possible that our uncertain tax positions of $ 261 million, including interest and penalties, may decrease by up to $ 34 million in the next twelve months due to expiration of statutes of limitations, settlements and/or conclusions of tax examinations. 14 Table of Contents 12 – Subsequent Events April 19, 2023, Weatherford Bermuda, the Company and Weatherford Delaware, entered into a Second Supplemental Indenture relating to the 2028 Senior Secured Notes which amended the “Limitation on Restricted Payments” covenant to permit the purchase, repurchase, redemption, defeasance or other acquisition or retirement of the Exit Notes. On April 20, 2023, we announced our intent to redeem the remaining principal of $ 105 million of our Exit Notes for a redemption price of 102.75 % on May 22, 2023, plus accrued and unpaid interest. 15 Table of Contents