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Item 1. Financial Statements

2023-07-26 compared with 2023-04-26 · 100 added, 80 removed, 274 unchanged (40% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

(Dollars and shares in millions, except per share amounts) 2023 2022 2023 2022

7 unchanged sentences

Selling, General and Administrative 198 196 388 374

Restructuring Charges — 20

Other Charges (Credits) 1 ( 14 ) ( 4 ) 25

1 unchanged sentence

Operating Income 201 104 386 122

Interest Expense, Net ( 31 ) ( 48 )

Interest Expense, Net of Interest Income of $ 16 , $ 6 , $ 32 and $ 11

( 31 ) ( 48 ) ( 62 ) ( 96 )

Loss on Blue Chip Swap Securities ( 57 ) — ( 57 ) —

Other Expense, Net ( 39 ) ( 32 ) ( 74 ) ( 48 )

Income (Loss) Before Income Taxes 74 24 193 ( 22 )

Income Tax Provision ( 38 ) ( 28 )

Income Tax Benefit (Provision) 16 ( 12 ) ( 22 ) ( 40 )

Net Income (Loss) 90 12 171 ( 62 )

8 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

(Dollars in millions) 2023

6 unchanged sentences

WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars and shares in millions, except par value) March 31, 2023 December 31, 2022

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars and shares in millions, except par value) June 30, 2023 December 31, 2022

Cash and Cash Equivalents $ 787 $ 910

Restricted Cash 135 202

Accounts Receivable, Net of Allowance for Credit Losses of $ 21 at March 31, 2023 and $ 26 at December 31, 2022

Accounts Receivable, Net of Allowance for Credit Losses of $ 19 at June 30, 2023 and $ 26 at December 31, 2022

Inventories, Net 751 689

1 unchanged sentence

Total Current Assets 2,971 3,043

Property, Plant and Equipment, Net of Accumulated Depreciation of $ 801 at March 31, 2023 and $ 773 at December 31, 2022

Intangible Assets, Net of Accumulated Amortization of $ 520 at March 31, 2023 and $ 480 at December 31, 2022

Property, Plant and Equipment, Net of Accumulated Depreciation of $ 825 at June 30, 2023 and $ 773 at December 31, 2022

Intangible Assets, Net of Accumulated Amortization of $ 560 at June 30, 2023 and $ 480 at December 31, 2022

Operating Lease Assets 127 115

15 unchanged sentences

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

Authorized 1,356 shares, Issued and Outstanding 72 shares at June 30, 2023 and 71 at December 31, 2022

Capital in Excess of Par Value 2,891 2,928

8 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Three Months Ended March 31,

Six Months Ended June 30,

(Dollars in millions) 2023 2022

3 unchanged sentences

Depreciation and Amortization 161 177

Loss on Blue Chip Swap Securities 57 —

Asset Write-downs and Other Charges — 6

1 unchanged sentence

Gain on Disposition of Assets ( 7 ) ( 14 )

Deferred Income Tax Provision 18 3

Deferred Income Tax Provision (Benefit) ( 53 ) 6

Share-Based Compensation 17 13

9 unchanged sentences

Proceeds from Disposition of Assets 14 43

Purchases of Blue Chip Swap Securities ( 110 ) —

Proceeds from Sales of Blue Chip Swap Securities 53 —

Other Investing Activities 21 8

1 unchanged sentence

Cash Flows From Financing Activities:

Repayments of Long-term Debt ( 66 ) ( 4 )

Noncontrolling Interest Dividends ( 6 ) —

Repayments and Repurchases of Long-term Debt ( 230 ) ( 7 )

Tax Remittance on Equity Awards Vested ( 54 ) ( 3 )

26 unchanged sentences

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.

Certain reclassifications have been made to these Condensed Consolidated Financial Statements and accompanying footnotes for the three and six months ended June 30, 2022 to conform to the presentation for the three and six months ended June 30, 2023.

New Accounting Standards

7 unchanged sentences

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.

Three Months Ended March 31,

All other includes results from non-core business activities (including integrated services and projects), and corporate includes overhead support and centrally managed or shared facilities costs.

All other and corporate do not individually meet the criteria for segment reporting.

Three Months Ended June 30, Six Months Ended June 30,

(Dollars in millions) 2023 2022 2023 2022

8 unchanged sentences

PRI Segment Adjusted EBITDA 81 68 149 107

Corporate and Other ( 3 ) ( 14 )

All Other 9 — 18 2

Corporate ( 14 ) ( 18 ) ( 26 ) ( 34 )

Depreciation and Amortization ( 81 ) ( 90 ) ( 161 ) ( 177 )

Share-Based Compensation ( 8 ) ( 6 ) ( 17 ) ( 13 )

Restructuring Charges — ( 20 )

Other (Charges) Credits (a)

Other (Charges) Credits ( 1 ) 14 4 ( 25 )

Operating Income $ 201 $ 104 $ 386 $ 122

(a) Other (charges) credits relate to miscellaneous charges and credits including write-downs of certain assets.

Disaggregated Revenue

4 unchanged sentences

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.

Equipment rental revenues were $ 39 million and $ 72 million in the three and six months ended June 30, 2023, respectively, and $ 35 million and $ 66 million for the three and six months ended June 30, 2022, respectively.

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.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(Dollars in millions) 2023 2022 2023 2022

7 unchanged sentences

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

The following table summarizes these balances as of June 30, 2023 and December 31, 2022:

(Dollars in millions) June 30, 2023 December 31, 2022

Receivables for Product and Services in Accounts Receivable, Net $ 1,036 $ 954

3 unchanged sentences

Contract Assets in Other Non-Current Assets $ 27 $ 21

Contract Liabilities in Other Current Liabilities (a)

Contract Liabilities in Other Current Liabilities $ 36 $ 54

Contract Liabilities in Other Non-Current Liabilities $ 3 $ —

(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

All Other — 3

Total Restructuring Charges $ — $ 20

4 – 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

Inventories, net of reserves of $ 126 million and $ 129 million as of June 30, 2023 and December 31, 2022, respectively, are presented by category in the table below:

(Dollars in millions) June 30, 2023 December 31, 2022

Finished Goods $ 645 $ 601

3 unchanged sentences

Inventory charges were recognized in the following captions on our Condensed Consolidated Statements of Operations:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(Dollars in millions) 2023 2022 2023 2022

4 unchanged sentences

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

Trade Names, Net of Accumulated Amortization of $ 131 at March 31, 2023 and $ 121 at December 31, 2022

Intangible Assets, Net of Accumulated Amortization of $ 520 at March 31, 2023 and $ 480 at December 31, 2022

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.

(Dollars in millions) June 30, 2023 December 31, 2022

Developed and Acquired Technology, Net of Accumulated Amortization of $ 419 at June 30, 2023 and $ 359 at December 31, 2022

Trade Names, Net of Accumulated Amortization of $ 141 at June 30, 2023 and $ 121 at December 31, 2022

Intangible Assets, Net of Accumulated Amortization of $ 560 at June 30, 2023 and $ 480 at December 31, 2022

Amortization expense was $ 40 million and $ 80 million in the three and six months ended June 30, 2023, respectively, and $ 39 million and $ 78 million in the three and six months ended June 30, 2022, respectively, and was reported in “Selling, General and Administrative” on our Condensed Consolidated Statements of Operations.

6 – Borrowings and Other Debt Obligations

(Dollars in millions) March 31, 2023 December 31, 2022

(Dollars in millions) June 30, 2023 December 31, 2022

Current Portion of Finance Leases $ 16 $ 14

8 unchanged sentences

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.

Interest was payable semiannually on June 1 and December 1 of each year.

The Exit Notes have been refinanced or redeemed in the years since issuance.

During 2023, we redeemed $ 20 million in principal of our Exit Notes in the first quarter and redeemed the remaining principal of $ 105 million in the second quarter.

2028 Senior Secured Notes

1 unchanged sentence

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.

In the second quarter of 2023 and for the six months ended June 30, 2023, we repurchased $ 54 million and $ 96 million in principal, respectively, of our 2028 Senior Secured Notes.

At June 30, 2023, the carrying value represents the remaining unpaid principal of $ 396 million offset by unamortized deferred issuance cost of $ 9 million.

At December 31, 2022, the carrying value represented unpaid principal of $ 492 million offset by unamortized deferred issuance cost of $ 10 million.

2030 Senior Notes

1 unchanged sentence

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.

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.

At June 30, 2023 and December 31, 2022, the carrying value represents the remaining unpaid principal of $ 1.6 billion offset by unamortized deferred issuance cost of $ 14 million in each period, respectively.

Credit Agreement

1 unchanged sentence

(“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

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).

On March 24, 2023, we further amended the Credit Agreement to permit unlimited prepayments and other redemptions of 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.

As of June 30, 2023, we had $ 385 million of letters of credit outstanding, consisting of the $ 250 million under the Credit Agreement and another $ 135 million under various uncommitted bi-lateral facilities (of which there was $ 128 million in cash collateral held and recorded in “Restricted Cash” on the Condensed Consolidated Balance Sheets).

As of December 31, 2022, we had $ 395 million of letters of credit outstanding, consisting of the $ 195 million 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 Condensed Consolidated Balance Sheets).

As of June 30, 2023 and December 31, 2022, our revolving loan capacity available was $ 45 million, respectively.

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.

The carrying value of our short-term borrowings, when applicable, approximates their fair value due to their short maturities.

As of June 30, 2023 and December 31, 2022, we had accrued interest of approximately $ 19 million and $ 22 million, respectively, in “Other Current Liabilities” primarily related to our outstanding debt as of the respective dates.

The carrying value of our short-term borrowings 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 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

June 30, 2023 December 31, 2022

(Dollars in millions) Carrying Value Fair Value Carrying Value Fair Value

11 unchanged sentences

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.

Accrued litigation and settlements recorded in “Other Current Liabilities” on the accompanying Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022 were $ 46 million and $ 41 million, respectively.

GAMCO Shareholder Litigation

12 unchanged sentences

8 – 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:

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 June 30, 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 and six months ended June 30, 2023 and 2022:

(Dollars in millions) Capital in Excess of Par Value Retained

9 unchanged sentences

$ 2,885 $ ( 2,299 ) $ ( 19 ) $ 19 $ 586

Net Income — 82 — 8 90

Equity Awards Granted, Vested and Exercised, Net of Shares Withheld for Taxes 6 — — — 6

Other Comprehensive Loss — — ( 10 ) — ( 10 )

Balance at June 30, 2023

$ 2,891 $ ( 2,217 ) $ ( 29 ) $ 27 $ 672

Balance at December 31, 2021

4 unchanged sentences

$ 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:

Net Income — 6 — 6 12

Dividends to Noncontrolling Interests — — — ( 11 ) ( 11 )

Equity Awards Granted, Vested and Exercised, Net of Shares Withheld for Taxes 5 — — — 5

Other Comprehensive Income — — 59 — 59

Balance at June 30, 2022

$ 2,913 $ ( 2,471 ) $ 24 $ 25 $ 491

The following table presents the changes in our accumulated other comprehensive income (loss) by component for the six months ended June 30, 2023 and 2022:

(Dollars in millions) Currency Translation Adjustment Defined Benefit Pension Total

1 unchanged sentence

$ ( 41 ) $ 19 $ ( 22 )

Other Comprehensive Income 3 — 3

Balance at March 31, 2023

Other Comprehensive Loss ( 7 ) — ( 7 )

Balance at June 30, 2023

$ ( 48 ) $ 19 $ ( 29 )

2 unchanged sentences

Other Comprehensive Income 59 — 59

Balance at March 31, 2022

Balance at June 30, 2022

$ 23 $ 1 $ 24

2 unchanged sentences

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.

Antidilutive shares represent securities that could potentially dilute income (loss) per share in the future, which are excluded from the computation 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.

1 unchanged sentence

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,

Three Months Ended June 30, Six Months Ended June 30,

(Dollars and shares in millions, except per share amounts) 2023 2022 2023 2022

7 unchanged sentences

10 – 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.

During the first quarter of 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.

We believed the change was appropriate as we are more reliably able to calculate the estimated annual effective tax rate due to sustained profitability and confidence in future earnings.

This method is applied for the three and six months ended June 30, 2023.

For the three and six months ended June 30, 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 June 30, 2023, we recognized a tax benefit of $ 16 million and for the six months ended June 30, 2023, we recognized a tax expense of $ 22 million, compared to the three and six months ended June 30, 2022 where we recognized tax expense of $ 12 million and $ 40 million, respectively.

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.

During the three and six months ended June 30, 2023, income tax expense was lower by $ 67 million, respectively, due to the release of valuation allowances and the recognition of a benefit from previously uncertain tax positions in the second quarter.

Those benefits were offset by the establishment of valuation allowance of approximately $ 20 million related to the $ 57 million loss on the sale of Blue Chip Swap securities in Argentina, further described in the following footnote.

During the three and six months ended June 30, 2022, income tax expense was lower by $ 27 million, respectively, due the recognition of a benefit from previously uncertain tax positions.

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.

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.

As of June 30, 2023, we anticipate that it is reasonably possible that our uncertain tax positions of $ 257 million, including interest and penalties, may decrease by up to $ 5 million in the next twelve months due to expiration of statutes of limitations, settlements and/or conclusions of tax examinations.

11 – Blue Chip Swap Securities - Argentina

The functional currency for our Argentine operations is the U.S.

dollar and we use Argentina’s official exchange rate to remeasure our Argentine peso-denominated net monetary assets into U.S.

dollars at each balance sheet date.

The Central Bank of Argentina has maintained certain currency controls that limited our ability to access U.S.

dollars in Argentina and to remit cash from our Argentine operations.

During the second quarter of 2023 we utilized an indirect foreign exchange mechanism known as a Blue Chip Swap (“BCS”) to remit U.S.

dollars from Argentina through the purchase and sale of BCS securities.

The transactions were completed at implied exchange rates (“BCS rates”) that were approximately 106 % higher than the official exchange rate resulting in a loss of $ 57 million during the second quarter of 2023.

We continue to use the official exchange rate for remeasurement of our Argentine peso-denominated net monetary assets under U.S.

GAAP as the BCS rate does not meet the criteria for remeasurement under U.S.

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

What changed 10-Q

Item 1. Financial Statements