Weatherford International plc 10-Q

Item 1. Financial Statements. WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended Six Months Ended June 30, June 30, (Dollars and shares in millions, except per share amounts) 2023 2022 2023 2022 Revenues: Services $ 794 $ 656 $ 1,535 $ 1,249 Products 480 408 925 753 Total Revenues 1,274 1,064 2,460 2,002 Costs and Expenses: Cost of Services 499 418 949 803 Cost of Products 348 338 688 635 Research and Development 27 22 53 43 Selling, General and Administrative 198 196 388 374 Other Charges (Credits) 1 ( 14 ) ( 4 ) 25 Total Costs and Expenses 1,073 960 2,074 1,880 Operating Income 201 104 386 122 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 Benefit (Provision) 16 ( 12 ) ( 22 ) ( 40 ) Net Income (Loss) 90 12 171 ( 62 ) Net Income Attributable to Noncontrolling Interests 8 6 17 12 Net Income (Loss) Attributable to Weatherford $ 82 $ 6 $ 154 $ ( 74 ) Basic Income (Loss) per Share $ 1.14 $ 0.08 $ 2.14 $ ( 1.04 ) Basic Weighted Average Shares Outstanding 72 71 72 71 Diluted Income (Loss) per Share $ 1.12 $ 0.08 $ 2.11 $ ( 1.04 ) Diluted Weighted Average Shares Outstanding 73 73 73 71 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 Six Months Ended June 30, June 30, (Dollars in millions) 2023 2022 2023 2022 Net Income (Loss) $ 90 $ 12 $ 171 $ ( 62 ) Foreign Currency Translation Adjustments ( 10 ) 59 ( 7 ) 59 Comprehensive Income (Loss) 80 71 164 ( 3 ) Comprehensive Income Attributable to Noncontrolling Interests 8 6 17 12 Comprehensive Income (Loss) Attributable to Weatherford $ 72 $ 65 $ 147 $ ( 15 ) 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 (UNAUDITED) (Dollars and shares in millions, except par value) June 30, 2023 December 31, 2022 (Unaudited) Assets: Cash and Cash Equivalents $ 787 $ 910 Restricted Cash 135 202 Accounts Receivable, Net of Allowance for Credit Losses of $ 19 at June 30, 2023 and $ 26 at December 31, 2022 1,068 989 Inventories, Net 751 689 Other Current Assets 230 253 Total Current Assets 2,971 3,043 Property, Plant and Equipment, Net of Accumulated Depreciation of $ 825 at June 30, 2023 and $ 773 at December 31, 2022 906 918 Intangible Assets, Net of Accumulated Amortization of $ 560 at June 30, 2023 and $ 480 at December 31, 2022 440 506 Operating Lease Assets 127 115 Other Non-Current Assets 204 138 Total Assets $ 4,648 $ 4,720 Liabilities: Current Portion of Long-term Debt $ 33 $ 45 Accounts Payable 502 460 Accrued Salaries and Benefits 293 367 Income Taxes Payable 162 141 Current Portion of Operating Lease Liabilities 42 44 Other Current Liabilities 432 413 Total Current Liabilities 1,464 1,470 Long-term Debt 1,993 2,203 Operating Lease Liabilities 125 117 Non-current Taxes Payable 257 251 Other Non-Current Liabilities 137 128 Total Liabilities $ 3,976 $ 4,169 Shareholders’ Equity: Ordinary Shares - Par Value $ 0.001 ; 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 Retained Deficit ( 2,217 ) ( 2,371 ) Accumulated Other Comprehensive Loss ( 29 ) ( 22 ) Weatherford Shareholders’ Equity 645 535 Noncontrolling Interests 27 16 Total Shareholders’ Equity 672 551 Total Liabilities and Shareholders’ Equity $ 4,648 $ 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) Six Months Ended June 30, (Dollars in millions) 2023 2022 Cash Flows From Operating Activities: Net Income (Loss) $ 171 $ ( 62 ) Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by (Used in) Operating Activities: Depreciation and Amortization 161 177 Loss on Blue Chip Swap Securities 57 — Asset Write-downs and Other Charges — 6 Inventory Charges 11 24 Gain on Disposition of Assets ( 7 ) ( 14 ) Deferred Income Tax Provision (Benefit) ( 53 ) 6 Share-Based Compensation 17 13 Changes in Operating Assets and Liabilities, Net: Accounts Receivable ( 83 ) ( 86 ) Inventories ( 75 ) ( 71 ) Accounts Payable 68 62 Other Assets and Liabilities, Net 18 ( 59 ) Net Cash Provided by (Used in) Operating Activities 285 ( 4 ) Cash Flows From Investing Activities: Capital Expenditures for Property, Plant and Equipment ( 100 ) ( 44 ) 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 Net Cash Provided by (Used in) Investing Activities ( 122 ) 7 Cash Flows From Financing Activities: Repayments and Repurchases of Long-term Debt ( 230 ) ( 7 ) Tax Remittance on Equity Awards Vested ( 54 ) ( 3 ) Other Financing Activities ( 13 ) ( 15 ) Net Cash Used in Financing Activities ( 297 ) ( 25 ) Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash ( 56 ) ( 1 ) Net Decrease in Cash, Cash Equivalents and Restricted Cash ( 190 ) ( 23 ) Cash, Cash Equivalents and Restricted Cash at Beginning of Period 1,112 1,113 Cash, Cash Equivalents and Restricted Cash at End of Period $ 922 $ 1,090 Supplemental Cash Flow Information: Interest Paid $ 95 $ 117 Income Taxes Paid, Net of Refunds $ 64 $ 42 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 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 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. 6 Table of Contents 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. 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 Revenues: DRE Revenues $ 394 $ 317 $ 766 $ 609 WCC Revenues 440 383 861 727 PRI Revenues 366 345 715 631 All Other 74 19 118 35 Total Revenues $ 1,274 $ 1,064 $ 2,460 $ 2,002 Operating Income: DRE Segment Adjusted EBITDA $ 106 $ 69 $ 214 $ 128 WCC Segment Adjusted EBITDA 109 67 205 134 PRI Segment Adjusted EBITDA 81 68 149 107 All Other 9 — 18 2 Corporate ( 14 ) ( 18 ) ( 26 ) ( 34 ) Depreciation and Amortization ( 81 ) ( 90 ) ( 161 ) ( 177 ) Share-Based Compensation ( 8 ) ( 6 ) ( 17 ) ( 13 ) Other (Charges) Credits ( 1 ) 14 4 ( 25 ) Operating Income $ 201 $ 104 $ 386 $ 122 7 Table of Contents 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 $ 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. and Canada. Three Months Ended June 30, Six Months Ended June 30, (Dollars in millions) 2023 2022 2023 2022 Revenues by Geographic Areas: Middle East/North Africa/Asia $ 421 $ 350 $ 797 $ 660 North America 265 268 551 506 Latin America 371 265 688 492 Europe/Sub-Sahara Africa/Russia 217 181 424 344 Total Revenues $ 1,274 $ 1,064 $ 2,460 $ 2,002 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 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 Receivables for Equipment Rentals in Account Receivable, Net $ 32 $ 35 Accounts Receivable, Net $ 1,068 $ 989 Contract Assets in Other Current Assets $ 52 $ 39 Contract Assets in Other Non-Current Assets $ 27 $ 21 Contract Liabilities in Other Current Liabilities $ 36 $ 54 Contract Liabilities in Other Non-Current Liabilities $ 3 $ — 8 Table of Contents 4 – Inventories, Net 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 Work in Process and Raw Materials, Components and Supplies 106 88 Inventories, Net $ 751 $ 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 June 30, Six Months Ended June 30, (Dollars in millions) 2023 2022 2023 2022 Inventory Charges in “Cost of Products” $ — $ 9 $ 11 $ 20 Inventory Charges in “Other Charges (Credits)” — — — 4 Total Inventory Charges $ — $ 9 $ 11 $ 24 9 Table of Contents 5 – Intangibles, Net The components of intangible assets, net were as follows: (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 $ 186 $ 232 Trade Names, Net of Accumulated Amortization of $ 141 at June 30, 2023 and $ 121 at December 31, 2022 254 274 Intangible Assets, Net of Accumulated Amortization of $ 560 at June 30, 2023 and $ 480 at December 31, 2022 $ 440 $ 506 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) June 30, 2023 December 31, 2022 Current Portion of Finance Leases $ 16 $ 14 Current Portion of 6.50 % Senior Secured Notes due 2028 “2028 Senior Secured Notes” 17 11 Current Portion of 11.00 % Exit Notes due 2024 “Exit Notes” — 20 Current Portion of Long-term Debt $ 33 $ 45 11.00 % Exit Notes due 2024 “Exit Notes” $ — $ 105 6.50 % Senior Secured Notes due 2028 “2028 Senior Secured Notes” 370 471 8.625 % Senior Notes due 2030 “2030 Senior Notes” 1,586 1,586 Long-term Portion Finance Leases 37 41 Long-term Debt $ 1,993 $ 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 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. 10 Table of Contents 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. 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 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. 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 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). 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 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 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. Fair Value 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 11 Table of Contents observable inputs in less active markets. The table below presents the fair value and carrying value of our long-term debt (excluding finance leases). June 30, 2023 December 31, 2022 (Dollars in millions) Carrying Value Fair Value Carrying Value Fair Value 11.00 % Exit Notes due 2024 $ — $ — $ 125 $ 128 6.50 % Senior Secured Notes due 2028 387 397 482 482 8.625 % Senior Notes due 2030 1,586 1,626 1,586 1,544 Long-Term Debt (excluding Finance Leases) $ 1,973 $ 2,023 $ 2,193 $ 2,154 7 – 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 June 30, 2023 and December 31, 2022 were $ 46 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 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 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 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 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 $ 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 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 13 Table of Contents 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 Balance at December 31, 2022 $ ( 41 ) $ 19 $ ( 22 ) Other Comprehensive Loss ( 7 ) — ( 7 ) Balance at June 30, 2023 $ ( 48 ) $ 19 $ ( 29 ) Balance at December 31, 2021 $ ( 36 ) $ 1 $ ( 35 ) Other Comprehensive Income 59 — 59 Balance at June 30, 2022 $ 23 $ 1 $ 24 9 – 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 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. 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 June 30, Six Months Ended June 30, (Dollars and shares in millions, except per share amounts) 2023 2022 2023 2022 Net Income (Loss) Attributable to Weatherford $ 82 $ 6 $ 154 $ ( 74 ) Basic Weighted Average Shares Outstanding 72 71 72 71 Dilutive Effect of Awards Granted in Stock Incentive Plans 1 2 1 — Diluted Weighted Average Shares Outstanding 73 73 73 71 Antidilutive Shares 9 8 9 11 Basic Income (Loss) Per Share Attributable to Weatherford $ 1.14 $ 0.08 $ 2.14 $ ( 1.04 ) Diluted Income (Loss) Per Share Attributable to Weatherford $ 1.12 $ 0.08 $ 2.11 $ ( 1.04 ) 14 Table of Contents 10 – Income Taxes 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. 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 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. GAAP. 15 Table of Contents