Weatherford International plc 10-K

Item 8. Financial Statements and Supplementary Data. INDEX TO FINANCIAL STATEMENTS PAGE Reports of Independent Registered Public Accounting Firm ( KPMG LLP , Houston, TX Firm ID 185 ) 43 Consolidated Statements of Operations for the years ended December 31, 202 3 , 202 2 and 202 1 46 Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2023, 2022 and 2021 47 Consolidated Balance Sheets as of December 31, 202 3 and 202 2 48 Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2023, 2022 and 2021 49 Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021 50 Notes to Consolidated Financial Statements 51 Weatherford International plc – 2023 Form 10-K | 42 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors Weatherford International plc: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Weatherford International plc and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 7, 2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Assessment of impairment triggering events related to long-lived assets As discussed in Note 1 to the consolidated financial statements, the Company evaluates long-lived assets, consisting of property, plant and equipment, operating lease right-of use assets, and definite-lived intangible assets, for impairment to determine whether any events or changes in circumstances, known as triggering events, indicate that the carrying amount of an asset group may not be recoverable. The triggering events evaluated by the Company include reduced or expected sustained decreases in cash flows generated by an asset group, negative changes in industry conditions (such as global rig count, commodity prices, and the global economy), a significant change in the long-lived assets’ use or physical condition, the introduction of competing technologies, and legal and regulatory challenges. The carrying value of long-lived assets as of December 31, 2023 was $1.5 billion. Weatherford International plc – 2023 Form 10-K | 43 Table of Contents We identified the assessment of impairment triggering events related to long-lived asset groups as a critical audit matter. The assessment of whether (i) reduced or expected sustained decreases in cash flows generated by an asset group and (ii) negative changes in industry conditions represented a triggering event required a higher degree of subjective auditor judgment. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s triggering events assessment. This included a control related to the Company’s process to identify and evaluate triggering events that indicate the carrying value of an asset group may not be recoverable. We evaluated the Company’s identification of triggering events related to the evaluation of cash flow trends for asset groups by comparing historical cash flow trends to the asset groups’ carrying values. Further, we evaluated the Company’s assessment of changes in industry conditions by comparing them to changes in global rig count, commodity prices, and economic outlook using data obtained from publicly available industry and market information. /s/ KPMG LLP We have served as the Company’s auditor since 2013. Houston, Texas February 7, 2024 Weatherford International plc – 2023 Form 10-K | 44 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors Weatherford International plc: Opinion on Internal Control Over Financial Reporting We have audited Weatherford International plc and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements), and our report dated February 7, 2024 expressed an unqualified opinion on those consolidated financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ KPMG LLP Houston, Texas February 7, 2024 Weatherford International plc – 2023 Form 10-K | 45 Table of Contents WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31, (Dollars and shares in millions, except per share amounts) 2023 2022 2021 Revenue: Services $ 3,179 $ 2,698 $ 2,353 Products 1,956 1,633 1,292 Total Revenue 5,135 4,331 3,645 Costs and Expenses: Cost of Services 1,965 1,688 1,547 Cost of Products 1,430 1,332 1,169 Research and Development 112 90 85 Selling, General and Administrative 804 778 738 Other Charges (Credits) 4 31 ( 10 ) Total Costs and Expenses 4,315 3,919 3,529 Operating Income 820 412 116 Other Income (Expense): Interest Expense, Net of Interest Income of $ 59 , $ 31 and $ 20 ( 123 ) ( 179 ) ( 260 ) Loss on Blue Chip Swap Securities ( 57 ) — — Loss on Extinguishment of Debt and Bond Redemption Premium ( 5 ) ( 5 ) ( 170 ) Other Expense, Net ( 129 ) ( 90 ) ( 29 ) Income (Loss) Before Income Taxes 506 138 ( 343 ) Income Tax Provision ( 57 ) ( 87 ) ( 86 ) Net Income (Loss) 449 51 ( 429 ) Net Income Attributable to Noncontrolling Interests 32 25 21 Net Income (Loss) Attributable to Weatherford $ 417 $ 26 $ ( 450 ) Basic Income (Loss) Per Share Attributable to Weatherford $ 5.79 $ 0.37 $ ( 6.43 ) Basic Weighted Average Shares Outstanding 72 71 70 Diluted Income (Loss) Per Share Attributable to Weatherford $ 5.66 $ 0.36 $ ( 6.43 ) Diluted Weighted Average Shares Outstanding 74 72 70 The accompanying notes are an integral part of these consolidated financial statements. Weatherford International plc – 2023 Form 10-K | 46 Table of Contents WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Year Ended December 31, (Dollars in millions) 2023 2022 2021 Net Income (Loss) $ 449 $ 51 $ ( 429 ) Foreign Currency Translation ( 2 ) ( 5 ) ( 5 ) Defined Benefit Pension ( 4 ) 18 13 Other Comprehensive Income (Loss) ( 6 ) 13 8 Comprehensive Income (Loss) 443 64 ( 421 ) Net Income Attributable to Noncontrolling Interests 32 25 21 Comprehensive Income (Loss) Attributable to Weatherford $ 411 $ 39 $ ( 442 ) The accompanying notes are an integral part of these consolidated financial statements. Weatherford International plc – 2023 Form 10-K | 47 Table of Contents WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, (Dollars and shares in millions, except par value) 2023 2022 Assets: Cash and Cash Equivalents $ 958 $ 910 Restricted Cash 105 202 Accounts Receivable, Net of Allowance for Credit Losses of $ 16 at December 31, 2023 and $ 26 at December 31, 2022 1,216 989 Inventories, Net 788 689 Other Current Assets 278 253 Total Current Assets 3,345 3,043 Property, Plant and Equipment, Net of Accumulated Depreciation of $ 883 at December 31, 2023 and $ 773 at December 31, 2022 957 918 Intangible Assets, Net of Accumulated Amortization of $ 639 at December 31, 2023 and $ 480 at December 31, 2022 370 506 Operating Lease Assets 138 115 Other Non-current Assets 258 138 Total Assets $ 5,068 $ 4,720 Liabilities: Current Portion of Long-term Debt $ 168 $ 45 Accounts Payable 679 460 Accrued Salaries and Benefits 387 367 Income Taxes Payable 138 141 Current Portion of Operating Lease Liabilities 46 44 Other Current Liabilities 448 413 Total Current Liabilities 1,866 1,470 Long-term Debt 1,715 2,203 Operating Lease Liabilities 131 117 Non-current Taxes Payable 282 251 Other Non-current Liabilities 152 128 Total Liabilities 4,146 4,169 Shareholders’ Equity: Ordinary Shares - Par value $ 0.001 ; Authorized 1,356 , Issued and Outstanding 72 at December 31, 2023 and 71 at December 31, 2022 — — Capital in Excess of Par Value 2,906 2,928 Retained Deficit ( 1,954 ) ( 2,371 ) Accumulated Other Comprehensive Loss ( 28 ) ( 22 ) Weatherford Shareholders’ Equity 924 535 Noncontrolling Interests ( 2 ) 16 Total Shareholders’ Equity 922 551 Total Liabilities and Shareholders’ Equity $ 5,068 $ 4,720 The accompanying notes are an integral part of these consolidated financial statements. Weatherford International plc – 2023 Form 10-K | 48 Table of Contents WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Dollars in millions) Par Value of Issued Shares Capital In Excess of Par Value Retained Income (Deficit) Accumulated Other Comprehensive Income (Loss) Non-controlling Interests Total Shareholders’ Equity Balance at December 31, 2020 $ — $ 2,897 $ ( 1,947 ) $ ( 43 ) $ 30 $ 937 Net Income (Loss) — — ( 450 ) — 21 ( 429 ) Equity Awards, Granted, Vested and Exercised, Net of Shares Withheld for Taxes — 7 — — — 7 Other Comprehensive Income — — — 8 — 8 Distributions to Noncontrolling Interests — — — — ( 27 ) ( 27 ) Balance at December 31, 2021 $ — $ 2,904 $ ( 2,397 ) $ ( 35 ) $ 24 $ 496 Net Income — — 26 — 25 51 Equity Awards, Granted, Vested and Exercised, Net of Shares Withheld for Taxes — 18 — — — 18 Other Comprehensive Income — — — 13 — 13 Distributions to Noncontrolling Interests — — — — ( 30 ) ( 30 ) Other — 6 — — ( 3 ) 3 Balance at December 31, 2022 $ — $ 2,928 $ ( 2,371 ) $ ( 22 ) $ 16 $ 551 Net Income — — 417 — 32 449 Equity Awards, Granted, Vested and Exercised, Net of Shares Withheld for Taxes — ( 22 ) — — — ( 22 ) Other Comprehensive Loss — — — ( 6 ) — ( 6 ) Distributions to Noncontrolling Interests — — — — ( 52 ) ( 52 ) Other — — — — 2 2 Balance at December 31, 2023 $ — $ 2,906 $ ( 1,954 ) $ ( 28 ) $ ( 2 ) $ 922 The accompanying notes are an integral part of these consolidated financial statements. Weatherford International plc – 2023 Form 10-K | 49 Table of Contents WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, (Dollars in millions) 2023 2022 2021 Cash Flows From Operating Activities: Net Income (Loss) $ 449 $ 51 $ ( 429 ) Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities: Depreciation and Amortization 327 349 440 Foreign Exchange Losses 116 71 9 Loss on Extinguishment of Debt and Bond Redemption Premium 5 5 170 Loss on Blue Chip Swap Securities 57 — — Inventory Charges 19 36 62 Gain on Disposition of Assets ( 11 ) ( 41 ) ( 22 ) Deferred Income Tax Provision (Benefit) ( 86 ) 4 ( 10 ) Employee Share-Based Compensation Expense 35 25 25 Changes in Accounts Receivable, Inventory, and Accounts Payable: Accounts Receivable ( 221 ) ( 193 ) ( 6 ) Inventories ( 114 ) ( 56 ) ( 18 ) Accounts Payable 231 84 56 Other Changes, Net 25 14 45 Net Cash Provided by Operating Activities $ 832 $ 349 $ 322 Cash Flows From Investing Activities: Capital Expenditures for Property, Plant and Equipment $ ( 209 ) $ ( 132 ) $ ( 85 ) Proceeds from Disposition of Assets 28 82 41 Purchases of Blue Chip Swap Securities ( 110 ) — — Proceeds from Sales of Blue Chip Swap Securities 53 — — Other Investing Activities ( 51 ) ( 4 ) ( 39 ) Net Cash Used in Investing Activities $ ( 289 ) $ ( 54 ) $ ( 83 ) Cash Flows From Financing Activities: Borrowings of Long-term Debt $ — $ — $ 2,073 Repayments of Long-term Debt ( 386 ) ( 198 ) ( 2,313 ) Bond Redemption Premium ( 5 ) ( 5 ) ( 131 ) Distributions to Noncontrolling Interests ( 52 ) ( 30 ) ( 21 ) Tax Remittance on Equity Awards Vested ( 56 ) ( 4 ) ( 1 ) Other Financing Activities ( 15 ) ( 11 ) ( 10 ) Net Cash Used in Financing Activities $ ( 514 ) $ ( 248 ) $ ( 403 ) Effect of Exchange Rate Changes on Cash and Cash Equivalents ( 78 ) ( 48 ) ( 8 ) Net Decrease in Cash, Cash Equivalents and Restricted Cash ( 49 ) ( 1 ) ( 172 ) Cash, Cash Equivalents and Restricted Cash at Beginning of Period 1,112 1,113 1,285 Cash, Cash Equivalents and Restricted Cash at End of Period $ 1,063 $ 1,112 $ 1,113 Supplemental Cash Flow Information Interest Paid $ 181 $ 220 $ 269 Income Taxes Paid, Net of Refunds $ 132 $ 86 $ 62 The accompanying notes are an integral part of these consolidated financial statements. Weatherford International plc – 2023 Form 10-K | 50 Table of Contents Item 8 | Notes to the Consolidated Financial Statements WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1 – Summary of Significant Accounting Policies Organization and Nature of Operations Weatherford International plc (“Weatherford Ireland”), an Irish public limited company, together with its subsidiaries (“Weatherford,” the “Company,” “we,” “us” and “our”), is a multinational energy services company. Weatherford is one of the world’s leading providers of equipment and services used in the drilling, evaluation, completion, production and intervention of oil, geothermal and natural gas wells. We conduct business in approximately 75 countries and have service and sales locations in oil and natural gas producing regions globally. The authorized share capital of Weatherford includes 1.356 billion ordinary shares with a par value of $ 0.001 per share. On June 1, 2021, the Nasdaq Stock Market LLC stock exchange (“NASDAQ”) approved our application for the listing of our ordinary shares. In connection with the listing, we became subject to the reporting requirements of the Securities Exchange Act of 1934 (as amended, the “Exchange Act”). Our ordinary shares began trading on the Nasdaq Global Select Market on June 2, 2021 under the ticker symbol “WFRD”. Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Exchange Act for annual financial information. We consolidate all wholly owned subsidiaries and controlled joint ventures and eliminate intercompany balances in consolidation. Certain reclassifications have been made to the financial statements and accompanying footnotes to conform to the Company’s current period presentation. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, the reported amounts of revenues and expenses during the reporting period, and disclosure of contingent liabilities. On an on-going basis, we evaluate our estimates and assumptions, including those related to allowance for credit losses, inventory valuation reserves, recoverability of long-lived assets, useful lives used in depreciation and amortization, income taxes and related valuation allowance, accruals for contingencies, valuation of derivative financial instruments, actuarial assumptions to determine costs and liabilities related to employee benefit plans, and share-based compensation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. Cash and Cash Equivalents We consider all highly liquid investments with original maturities of three months or less to be cash equivalents. Restricted Cash Our restricted cash balance of $ 105 million at December 31, 2023 and $ 202 million at December 31, 2022 primarily includes cash collateral for certain of our letters of credit facilities. Weatherford International plc – 2023 Form 10-K | 51 Table of Contents Item 8 | Notes to the Consolidated Financial Statements Accounts Receivables and Allowance for Credit Losses Substantially all of our customers are in fossil fuel-related industries and thus this concentration of customers may impact our overall exposure to credit risk, either positively or negatively, in that customers may be similarly affected by changes in economic and industry conditions. We perform periodic credit evaluations of our customers and do not generally require collateral in support of our trade receivables. We establish an allowance for credit losses based on various factors, including historical experience, current conditions and environments in which our customers operate, the aging status and reasonable and supportable forecasts. The determination of the collectability requires us to use estimates and make judgments regarding future events and trends, including monitoring our customers’ payment history and current creditworthiness, as well as consideration of the overall business and political climate in which our customers operate. Risk profiles can vary between larger and smaller independent customers as well as between state-owned customers. Account balances are charged against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. As of December 31, 2023 , and December 31, 2022, Mexico accounted for 27 % and 21 % of our total net outstanding accounts receivables, respectively, of which our largest customer in the country accounted for 22 % and 18 % of our total net outstanding accounts receivables, respectively. From time to time, we experience delayed payments from our largest customer in Mexico although the balances due are not in dispute and we do not expect to have any material write-offs of receivables. Delays or failure to pay in the future could differ from management’s expectations and negatively impact future results of the Company. As of December 31, 2023 , and December 31, 2022, the U.S. accounted for 11 % and 12 % of our total net accounts receivables, respectively. No other country or individual customer accounted for more than 10% of our total net outstanding accounts receivables. Inventories We state our inventories at the lower of cost or net realizable value using either the first-in, first-out (“FIFO”) or average cost method. Cost represents third-party invoice or production cost. Production cost includes material, labor and manufacturing overhead. To maintain a carrying value that is the lower of cost or net realizable value, we regularly review inventory quantities on hand and compare to estimates of future product demand, market conditions, our production requirements, and technological developments. We maintain reserves for excess, slow moving and obsolete inventory and we may periodically recognize additional charges for inventory in which we determine there is no forecasted demand. Property, Plant and Equipment (“PP&E”) PP&E is both owned and under finance leases. Owned PP&E are initially stated at cost and finance leases are initially stated at the present value of lease payments. Both are depreciated on straight-line basis over its estimated useful life. Subsequently, PP&E is measured at cost less accumulated depreciation and adjusted for impairment, when applicable. The carrying values are based on our estimates and judgments relative to capitalized costs, useful lives and salvage value, where applicable. We expense maintenance and repairs as incurred and capitalize expenditures for improvements as well as renewals and replacements that extend the useful life of the asset. We estimate the useful lives of our PP&E over their respective lease terms, if applicable, or as follows: Assets Estimated Useful Lives Buildings and leasehold improvements 10 – 40 years Rental and service equipment 3 – 10 years Machinery and other 2 – 12 years Intangible Assets Our identifiable intangible assets include developed and acquired technologies and our trade names, amortized on a straight-line basis over their estimated economic lives, generally ranging from 5 years (developed and acquired technologies) to 10 years (trade names). As many areas of our business rely on patents and proprietary technology, we seek patent protection both inside and outside the U.S. for products and methods that appear to have commercial significance. We capitalize patent defense costs when we determine that a successful defense is probable. Weatherford International plc – 2023 Form 10-K | 52 Table of Contents Item 8 | Notes to the Consolidated Financial Statements Leases We are committed under various operating lease agreements primarily related to office space and equipment. Generally, these leases include renewal provisions and rental payments, which may be adjusted for taxes, insurance and maintenance related to the property. Leases with an initial term of 12 months or less (“short-term leases”) are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. Operating lease assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date and include related options to extend or terminate lease terms that are reasonably certain of being exercised. We determine if an arrangement is classified as a lease at its inception. As most of our leases do not provide an implicit rate of return, on a quarterly basis, we use our incremental borrowing rate, together with the lease term information available at commencement date of the lease, in determining the present value of lease payments. Long-Lived Assets Impairment Long-lived assets, consisting of PP&E, operating lease assets and intangible assets, to be held and used are reviewed to determine whether any events or changes in circumstances, known as triggering events, indicate that we may not be able to recover the carrying amount of the asset group. Triggering events include, but are not limited to, reduced or expected sustained decreases in cash flows generated by an asset group, negative changes in industry conditions (such as global rig count, commodity prices, and the global economy), a significant change in the long-lived assets’ use or physical condition, the introduction of competing technologies, and legal and regulatory challenges. The Company groups individual assets at the lowest level of identifiable cash flows and, if impairment triggers are present, performs an undiscounted cash flow analysis to identify asset groups that may not be recoverable. If the undiscounted cash flows do not exceed the carrying value of the long-lived asset group, impairment is recognized to the extent the carrying amount exceeds the estimated fair value of the asset group, as determined by a discounted cash flow analysis. Research and Development Expenditures Research and development expenditures are expensed as incurred. Derivative Financial Instruments We enter into foreign currency forward contracts to mitigate the risk of future cash flows denominated in a foreign currency. The amounts will fluctuate, depending on exchange rate volatility, the volume of our foreign currency transactions, and our decisions to hedge. During the fourth quarter of 2023, we entered into a credit default swap. The notional amounts of our foreign currency forward contracts and the credit default swap do not generally represent cash amounts exchanged by the parties and are calculated based on the terms of the derivative instrument. Both our foreign currency forward contracts and the credit default swap are undesignated hedging instruments under Accounting Standards Codification “ASC” 815 Derivatives and Hedging. We record these derivative instruments on the balance sheet at their fair value as either assets or liabilities. See “Note 10 – Derivative Financial Instruments” for additional information. The fair values of our outstanding derivative instruments are determined using models with either Level 2 or Level 3 inputs. See “Note 9 – Fair Value of Financial Instruments, Assets and Other Assets” for additional information. Foreign Currency Results of operations for our foreign subsidiaries with functional currencies other than the U.S. dollar are translated using average exchange rates during the period. Assets and liabilities translated using the exchange rates in effect at the balance sheet dates are included in “Accumulated Other Comprehensive Loss” on the accompanying Consolidated Statements of Shareholders' Equity. For our subsidiaries with a functional currency that differs from the currency of their balances and transactions, inventories, PP&E and other non-monetary assets and liabilities, together with their related elements of expense or income, are remeasured into the functional currency using historical exchange rates. All monetary assets and liabilities are remeasured into the functional currency at current exchange rates. Remeasurement gains and losses are recognized during the period incurred and recognized in “Other Expense, Net” on the accompanying Consolidated Statements of Operations. Weatherford International plc – 2023 Form 10-K | 53 Table of Contents Item 8 | Notes to the Consolidated Financial Statements Share-Based Compensation We account for share-based payment awards by recognizing the grant date fair value as an expense, net of forfeitures, over the service period, which is usually the vesting period. The fair value and associated expense is adjusted when the published price of our stock changes for share-based awards we intend to settle in cash. We record share-based compensation in “Selling, General and Administrative” on the accompanying Consolidated Statements of Operations. Income Taxes We account for taxes under the asset and liability method. Income taxes have been provided based upon the tax laws and rates in the countries in which our operations are conducted and income is earned. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. A valuation allowance for deferred tax assets is recorded when it is more likely than not that some or all of the benefit from the deferred tax asset will not be realized. The impact of an uncertain tax position taken or expected to be taken on an income tax return is recognized in the financial statements at the largest amount that is more likely than not to be sustained upon examination by the relevant taxing authority. Disputes, Litigation and Contingencies We accrue an estimate of costs to resolve certain disputes, legal matters and contingencies when a loss on these matters is deemed probable and reasonably estimable. For matters not deemed probable or not reasonably estimable, we have not accrued any amounts. Our contingent loss estimates are based upon an analysis of potential results, assuming a combination of possible litigation and settlement strategies. The accuracy of these estimates is impacted by the complexity of the associated issues. Revenue Recognition We account for revenue in accordance with ASU 2014-09, Revenue from Contracts with Customers (Topic 606) , and all of the related amendments, collectively referred to as “Topic 606”. Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. The majority of our revenue is derived from short-term contracts. Our products and services are generally sold based upon purchase orders, contracts or other legally enforceable arrangements with our customers that include fixed or determinable prices but do not generally include right of return provisions or other significant post-delivery obligations. If the terms of a service contract give us the right to invoice the customer for an amount that corresponds directly with the value of our performance completed to date, revenues are recognized at the amount to which we have the right to invoice. For certain long-term contracts, our revenue is recognized for services over time as the services are rendered and we utilize an output method such as time elapsed or footage drilled, which coincides with how customers receive the benefit. We lease drilling tools, artificial lift pumping equipment and other unmanned equipment to customers as operating leases. These equipment rental revenues are generally provided based on call-out work orders that include fixed per unit prices and are derived from short-term contracts. Equipment rental revenues are recognized under ASU No. 2016-02, Leases (Topic 842) and are recorded within “Services Revenue” on the accompanying Consolidated Statements of Operations. Contract Balances The timing of revenue recognition, billings and cash collections results in billed and unbilled accounts receivable (included in “Accounts Receivable, Net”), contract assets (included in “Other Current Assets” and “Other Non-Current Assets”), and contract liabilities (included in “Other Current Liabilities” and “Other Non-current Liabilities”) on our Consolidated Balance Sheets. We recognize receivables for work completed on service contracts but not billed in which the rights to consideration are conditional as contract assets. We recognize contract liabilities when consideration is received in advance of the recognition of revenue. Weatherford International plc – 2023 Form 10-K | 54 Table of Contents Item 8 | Notes to the Consolidated Financial Statements Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. We generally bill our sales of products and services upon completion of the performance obligation. Product sales and services are billed and recognized when control passes to the customer. Our products are produced in a standard manufacturing operation, even if produced to our customer’s specifications. Our payment terms vary by the type and location of our customer and the products or services offered. For certain products or services and customer types, we require payment before the products or services are delivered to the customer and record as a contract liability. We defer revenue recognition on such payments until the products or services are delivered to the customer. Revenue is occasionally generated from contracts that include multiple performance obligations, such as product sales with related installation and/or maintenance services. The consideration in the contract is allocated between separate products and services based on their standalone selling prices (determined based on the prices at which we separately sell our products and services). We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. Income (Loss) per Share Basic income (loss) per share for all periods presented equals net income (loss) divided by the weighted average shares outstanding during the period including participating securities. Diluted income (loss) per share is computed by dividing net income (loss) by our weighted average shares outstanding during the period including participating securities and any potential dilutive shares, when applicable. Accounting Standards Issued Not Yet Adopted In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, Segment Reporting (Topic 280)-Improvements to Reportable Segment Disclosures , an update that improves reportable segment disclosure requirements. Under ASU 2023-07, issuers must provide enhanced interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contains other disclosure requirements. The amendments are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, and should be applied retrospectively. We expect to adopt ASU 2023-07 in our 2024 Form 10-K and in the interim periods thereafter. The adoption of ASU 2023-07 will require us to provide additional disclosures related to our segments, but otherwise will not materially impact our financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , an update that improves income tax disclosure requirements. Under ASU 2023-09, issuers must annually (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate). The amendments are effective for fiscal years beginning after December 15, 2024 and should be applied prospectively. We expect to adopt ASU 2023-09 in our 2025 Form 10-K. The adoption of ASU 2023-09 will require us to provide additional disclosures related to our income taxes, but otherwise will not materially impact our financial statements. Evaluations of all other new accounting pronouncements that have been issued, but not yet effective are on-going, and at this time are not expected to have a material impact on our Consolidated Financial Statements. Weatherford International plc – 2023 Form 10-K | 55 Table of Contents Item 8 | Notes to the Consolidated Financial Statements 2 – Segment Information The Company's chief operating decision maker (“CODM”), our chief executive officer, regularly reviews information to make operating decisions, allocate resources and assess performance of the business. The CODM regularly reviews information aligned with how we offer our services and technologies in relation to the well life cycle as reflected in our reportable segments. All of our segments are enabled by a suite of digital monitoring, control and optimization solutions using advanced analytics to provide safe, reliable and efficient solutions throughout the well life cycle, including responsible abandonment. We have three reportable segments: (1) Drilling and Evaluation (2) Well Construction and Completions, and (3) Production and Intervention. Drilling and Evaluation (“DRE”) offers a suite of services including managed pressure drilling, drilling services, wireline and drilling fluids. DRE offerings range from early well planning to reservoir management through innovative tools and expert engineering to optimize reservoir access and productivity. Well Construction and Completions (“WCC”) offers products and services for well integrity assurance across the full life cycle of the well. The primary offerings are tubular running services, cementation products, completions, liner hangers and well services. WCC deploys conventional to advanced technologies, providing safe and efficient services in any environment during the well construction phase. Production and Intervention (“PRI”) offers a suite of reservoir stimulation designs, and engineering capabilities that isolate zones and unlock reserves in conventional and unconventional wells, deep water, and aging reservoirs. The primary offerings are intervention services & drilling tools, artificial lift, digital solutions (previously production automation & software), sub-sea intervention and pressure pumping services in select markets. Total revenues are from external customers and segment revenues are specific to our three reportable segments and all other revenues are specific to our non-operating segment revenues. Revenues are further described in “Note 3 – Revenue.” 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. Weatherford International plc – 2023 Form 10-K | 56 Table of Contents Item 8 | Notes to the Consolidated Financial Statements Year Ended December 31, (Dollars in millions) 2023 2022 2021 Revenue: DRE $ 1,536 $ 1,328 $ 1,066 WCC 1,800 1,521 1,353 PRI 1,472 1,395 1,127 All Other 327 87 99 Total Revenue $ 5,135 $ 4,331 $ 3,645 Operating Income: DRE Segment Adjusted EBITDA $ 422 $ 324 $ 186 WCC Segment Adjusted EBITDA 455 299 256 PRI Segment Adjusted EBITDA 323 261 191 All Other 38 1 6 Corporate ( 52 ) ( 68 ) ( 68 ) Depreciation and Amortization ( 327 ) ( 349 ) ( 440 ) Share-based Compensation Expense (a) ( 35 ) ( 25 ) ( 25 ) Other (Charges) Credits ( 4 ) ( 31 ) 10 Operating Income $ 820 $ 412 $ 116 (a) See “Note 13 – Share-Based Compensation” for additional information. Year Ended December 31, (Dollars in millions) 2023 2022 2021 Depreciation and Amortization: DRE $ 102 $ 112 $ 164 WCC 95 99 123 PRI 84 86 102 Corporate and Other 46 52 51 Total Depreciation and Amortization $ 327 $ 349 $ 440 Capital Expenditures: DRE 104 $ 54 $ 18 WCC 49 35 18 PRI 34 32 36 Corporate and Other 22 11 13 Total Capital Expenditures $ 209 $ 132 $ 85 Weatherford International plc – 2023 Form 10-K | 57 Table of Contents Item 8 | Notes to the Consolidated Financial Statements December 31, (Dollars in millions) 2023 2022 Total Assets: DRE $ 766 $ 713 WCC 1,066 993 PRI 702 729 Corporate and Other (a) 2,534 2,285 Total $ 5,068 $ 4,720 (a) Corporate and other total assets primarily include cash and cash equivalents, certain intangible assets, and centrally managed or shared facilities. PP&E, Net and Operating Lease Assets by Geographic Area As of December 31, 2023, and 2022 the U.S. accounted for 23 % and 22 %, respectively, and as of December 31, 2023, the Kingdom of Saudi Arabia accounted for 10 % of our PP&E, Net and operating lease assets identifiable by geography. No other country accounted for more than 10% of our PP&E, Net and operating lease assets identifiable by geography as of December 31, 2023 and 2022. We had no PP&E, Net and operating lease assets in our country of domicile (Ireland) as of December 31, 2023, and 2022. December 31, (Dollars in millions) 2023 2022 North America (a) $ 280 $ 246 Latin America 177 176 Middle East/North Africa/Asia 393 354 Europe/Sub-Sahara Africa/Russia 211 239 PP&E, Net and Operating Lease Assets by Geography (b) $ 1,061 $ 1,015 (a) North America consists of the U.S. and Canada. (b) Corporate assets not allocated by geography are excluded from this total. 3 – Revenue Disaggregated Revenue For additional details on our revenue recognition policies see “Note 1 – Summary of Significant Accounting Policies”. The following tables disaggregate our revenue from contracts with customers by geographic region and includes equipment rental revenue. Equipment rental revenue were $ 142 million, $ 146 million and $ 131 million in 2023, 2022 and 2021, respectively. During 2023, Mexico accounted for 13 % of total revenue, driven by our largest customer, which accounted for 10 % of our total revenue. During 2023, 2022 and 2021, the U.S. accounted for 16 %, 20 % and 19 % of total revenue, respectively. No other country or individual customer accounted for more than 10% of our total revenue in 2023, 2022 and 2021. We had no revenue in our country of domicile (Ireland) in 2023, 2022 and 2021. Weatherford International plc – 2023 Form 10-K | 58 Table of Contents Item 8 | Notes to the Consolidated Financial Statements Year Ended December 31, (Dollars in millions) 2023 2022 2021 Revenue by Geographic Areas: North America (a) $ 1,068 $ 1,104 $ 896 International 4,067 3,227 2,749 Latin America 1,387 1,062 814 Europe/Sub-Sahara Africa/Russia 865 764 737 Middle East/North Africa/Asia 1,815 1,401 1,198 Total Revenue $ 5,135 $ 4,331 $ 3,645 (a) North America consists of the U.S. and Canada. Contract Balances The timing of our revenue recognition, billings and cash collections result in the recording of accounts receivable, contract assets, and contract liabilities. The following table summarizes these balances as of December 31, 2023, and December 31, 2022: December 31, (Dollars in millions) 2023 2022 Receivables for Product and Services in Accounts Receivable, Net $ 1,182 $ 954 Receivables for Equipment Rentals in Account Receivable, Net $ 34 $ 35 Accounts Receivable, Net of Allowance for Credit Losses of $ 16 at December 31, 2023 and $ 26 at December 31, 2022 (a) $ 1,216 $ 989 Contract Assets in Other Current Assets $ 61 $ 39 Contract Assets in Other Non-Current Assets $ 24 $ 21 Contract Liabilities in Other Current Liabilities $ 58 $ 54 Contract Liabilities in Other Non-Current Liabilities $ 5 $ — (a) The change in allowance for credit losses includes charges offset primarily by recoveries and write-offs. The credit loss charges were $ 9 million, $ 10 million and $ 30 million during 2023, 2022 and 2021, respectively. Offsets to allowance for credit losses were primarily recoveries and write-offs of $ 19 million, $ 15 million and $ 31 million during 2023, 2022 and 2021, respectively. Weatherford International plc – 2023 Form 10-K | 59 Table of Contents Item 8 | Notes to the Consolidated Financial Statements 4 – Inventories, Net Inventories, net of reserves of $ 121 million and $ 129 million as of December 31, 2023 and December 31, 2022, respectively, by category were as follows: December 31, (Dollars in millions) 2023 2022 Finished Goods $ 688 $ 601 Work in Process and Raw Materials, Components and Supplies 100 88 Inventories, Net $ 788 $ 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 Consolidated Statements of Operations: Year Ended December 31, (Dollars in millions) 2023 2022 2021 Inventory Charges in “Cost of Products” $ 19 $ 32 $ 55 Inventory Charges in “Other Charges (Credits)” — 4 7 Total Inventory Charges $ 19 $ 36 $ 62 5 – Property, Plant and Equipment, Net Property, plant and equipment, net was composed of the following: December 31, (Dollars in millions) 2023 2022 Land, Buildings and Leasehold Improvements $ 482 $ 476 Rental and Service Equipment 1,092 983 Machinery and Other 266 232 Property, Plant and Equipment, Gross 1,840 1,691 Less: Accumulated Depreciation 883 773 Property, Plant and Equipment, Net $ 957 $ 918 Depreciation expense was $ 171 million, $ 194 million and $ 284 million in 2023, 2022 and 2021, respectively. Weatherford International plc – 2023 Form 10-K | 60 Table of Contents Item 8 | Notes to the Consolidated Financial Statements 6 – Intangible Assets, Net The components of intangible assets, net were as follows: December 31, 2023 Gross Net Carrying Accumulated Intangible (Dollars in millions) Amount Amortization Assets Developed and Acquired Technology $ 614 $ ( 479 ) $ 135 Trade Names 395 ( 160 ) 235 Intangible Assets, Net $ 1,009 $ ( 639 ) $ 370 December 31, 2022 Gross Net Carrying Accumulated Intangible (Dollars in millions) Amount Amortization Assets Developed and Acquired Technology $ 591 $ ( 359 ) $ 232 Trade Names 395 ( 121 ) 274 Intangible Assets, Net $ 986 $ ( 480 ) $ 506 Amortization expense was $ 156 million, $ 155 million and $ 156 million in 2023, 2022, and 2021, respectively. Based on the carrying value of intangible assets at December 31, 2023 , amortization expense for the subsequent five years is estimated as follows (dollars in millions): Period Amount 2024 $ 150 2025 45 2026 45 2027 44 2028 43 Weatherford International plc – 2023 Form 10-K | 61 Table of Contents Item 8 | Notes to the Consolidated Financial Statements 7 – Leases The following table presents our lease expense components: Year Ended December 31, (Dollars in millions) 2023 2022 2021 Lease Expense Components: Operating Lease Expense $ 60 $ 57 $ 61 Short-term and Variable Lease Expense 174 90 65 Subtotal of Operating Lease Expense $ 234 $ 147 $ 126 Finance Lease Expense: Amortization of Assets and Interest on Lease Liabilities 19 18 16 Sublease Income ( 2 ) ( 3 ) ( 4 ) Total Lease Expense $ 251 $ 162 $ 138 Future commitments under operating and finance leases are as follows: Operating Finance (Dollars in millions) Leases Leases Maturity of Lease Liabilities as of December 31, 2023 : 2024 $ 58 $ 21 2025 48 18 2026 36 15 2027 25 5 2028 13 1 After 2028 93 — Total Lease Payments 273 60 Less: Interest ( 96 ) ( 7 ) Present Value of Lease Liabilities $ 177 $ 53 Weatherford International plc – 2023 Form 10-K | 62 Table of Contents Item 8 | Notes to the Consolidated Financial Statements Years Ended (Dollars in millions except years and percentages) 12/31/2023 12/31/2022 12/31/2021 Other Supplemental Information: Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 67 $ 80 $ 89 Operating cash outflows from finance leases $ 5 $ 5 $ 5 Financing cash outflows from finance leases $ 18 $ 16 $ 13 Assets obtained in exchange for: Operating leases $ 70 $ 50 $ 23 Finance leases $ 16 $ 18 $ 6 Weighted-average remaining lease term (years) Operating leases 8.4 8.8 8.9 Finance leases 3.1 3.9 4.8 Weighted-average discount rate (percentages) Operating leases 8.8 % 9.1 % 9.6 % Finance leases 8.2 % 8.5 % 8.9 % Weatherford International plc – 2023 Form 10-K | 63 Table of Contents Item 8 | Notes to the Consolidated Financial Statements 8 – Borrowings and Other Debt Obligations Total debt carrying values consisted of the following: December 31, (Dollars in millions) 2023 2022 Current portion of 6.5 % Senior Secured Notes due 2028 “2028 Senior Secured Notes” $ 151 $ 11 Current portion of 11.00 % Exit Notes due 2024 “Exit Notes” — 20 Finance Lease Current Portion 17 14 Current Portion of Long-term Debt $ 168 $ 45 8.625 % Senior Notes due 2030 “2030 Senior Notes” $ 1,587 $ 1,586 6.5 % Senior Secured Notes due 2028 “2028 Senior Secured Notes” 92 471 11.00 % Exit Notes due 2024 “Exit Notes” — 105 Finance Lease Long-term Portion 36 41 Long-term Debt $ 1,715 $ 2,203 Our Exit Notes and 2028 Senior Secured Notes were issued by Weatherford International Ltd., a Bermuda exempted company (“Weatherford Bermuda”), and guaranteed by the Company and Weatherford International, LLC, a Delaware limited liability company (“Weatherford Delaware”) and other subsidiary guarantors party thereto. The 2028 Senior Secured Notes and the related guarantees are secured by substantially all of the assets and properties of the Company and the other guarantors (on an effectively first-priority basis with respect to the priority collateral for the 2028 Senior Secured Notes, and on an effectively second-priority basis with respect to the priority collateral for the senior secured letter of credit agreement (now the “Credit Agreement”), in each case, subject to permitted liens). Our 2030 Senior Notes were originally issued by Weatherford Bermuda and guaranteed by the Company and Weatherford Delaware and other subsidiary guarantors party thereto. On December 1, 2022, the indenture related to our 2030 Senior Notes was amended and supplemented to add Weatherford Delaware as co-issuer and co-obligor, and concurrently releases the guarantee of Weatherford Delaware. The bond redemption premiums and noncash loss on extinguishment of debt related to the unamortized debt issuance costs described in the following paragraphs are presented as “Loss on Extinguishment of Debt and Bond Redemption Premium” on the Consolidated Statements of Operations. Additionally, debt issuance costs described in the following paragraphs reduce the carrying amount of the debt liability and are recognized using the effective interest rate method over the term of the debt in “Interest Expense, Net of Interest Income” on our Consolidated Financial Statements. Exit Notes On December 13, 2019, we issued unsecured 11.00 % Exit Notes due in 2024 for an aggregate principal amount of $ 2.1 billion. Interest on the Exit Notes accrues at the rate of 11.00 % per annum and is payable semiannually on June 1 and December 1. Proceeds from the issuance were reduced by debt issuance costs. In 2021, we redeemed $ 1.8 billion in principal amount and paid the related accrued interest along with a bond redemption premium of $ 109 million and recognized a $ 2 million noncash loss on extinguishment of debt related to the unamortized debt issuance costs. Part of this redemption used net proceeds from our issuance of $ 1.6 billion of 2030 Senior Notes (defined below) and cash on hand. In 2022, we redeemed $ 175 million in principal amount and paid the related accrued interest along with a bond redemption premium of $ 5 million. During the fourth quarter of 2022, we elected to redeem an additional $ 20 million and presented this amount as “Short-term Borrowings and Current Portion of Long-term Debt” on the Consolidated Financial Statements as of December 31, 2022. Weatherford International plc – 2023 Form 10-K | 64 Table of Contents Item 8 | Notes to the Consolidated Financial Statements In 2023, we fully redeemed the remaining $ 125 million principal amount and paid the related accrued interest along with a bond redemption premium of $ 3 million. 2024 Senior Secured Notes On August 28, 2020, we entered into an indenture and issued the 8.75 % Senior Secured Notes for an aggregate principal amount of $ 500 million maturing September 1, 2024 (the “2024 Senior Secured Notes”). Interest accrued at the rate of 8.75 % per annum and was payable semiannually on March 1 and September 1. In 2021, we fully repaid the remaining unpaid principal of $ 500 million, along with a $ 22 million bond redemption premium and recognized a $ 37 million noncash loss on extinguishment of debt related to the unamortized debt issuance costs and discount. 2028 Senior Secured Notes On September 30, 2021, we issued 6.5 % Senior Secured Notes in aggregate principal amount of $ 500 million maturing September 15, 2028 (the “2028 Senior Secured Notes”). Interest accrues at the rate of 6.5 % per annum and is payable semiannually on September 15 and March 15 of each year, and commenced March 15, 2022. Proceeds from the issuance were reduced by debt issuance costs. In 2023, we repurchased $ 243 million in principal along with a $ 2 million bond redemption premium and in 2022, we repurchased $ 8 million in principal of our 2028 Senior Secured Notes. At December 31, 2023 and December 31, 2022, the carrying value represents the remaining unpaid principal of $ 248 million and $ 492 million, respectively, offset by unamortized deferred issuance cost of $ 5 million and $ 10 million, respectively. Subsequent to year-end, in January 2024, we repurchased an additional $ 151 million (presented as “Short-term Borrowings and Current Portion of Long-term Debt” on the Consolidated Financial Statements as of December 31, 2023) in principal amount of our 2028 Senior Secured Notes, leaving $ 97 million as the remaining unpaid principal. 2030 Senior Notes On October 27, 2021, we issued 8.625 % Senior Notes in aggregate principal amount of $ 1.6 billion maturing April 30, 2030 (the “2030 Senior Notes”). Interest accrues at the rate of 8.625 % per annum and is payable semiannually on June 1 and December 1 of each year, and commenced June 1, 2022. On December 1, 2022, we modified our 2030 Senior Notes, as described earlier. At December 31, 2023 and December 31, 2022, the carrying value represents the remaining unpaid principal of $ 1.6 billion at each date, offset by unamortized deferred issuance cost of $ 13 million and $ 14 million, respectively. Credit Agreement Weatherford Bermuda, Weatherford Delaware, Weatherford Canada Ltd. (“Weatherford Canada”) and WOFS International Finance GmbH (“Weatherford Switzerland”), together as borrowers, and the Company as parent, have an amended and restated credit agreement (the “Credit Agreement”). The Credit Agreement is guaranteed by the Company and certain of our subsidiaries and secured by substantially all of the personal property of the Company and those subsidiaries. At December 31, 2023, the Credit Agreement allowed for a total commitment amount of $ 550 million, maturing on the earlier of October 24, 2028 and 91 days prior to the maturity of the 2028 Senior Secured Notes. Financial covenants in the Credit Agreement include a $ 250 million minimum liquidity covenant (which may increase up to $ 400 million dependent on the nature of transactions we may decide to enter into), a minimum interest coverage ratio of 2.50 to 1.00, a maximum total net leverage ratio of 3.50 to 1.00, and a maximum secured net leverage ratio of 1.50 to 1.00. On March 24, 2023, we 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. Weatherford International plc – 2023 Form 10-K | 65 Table of Contents Item 8 | Notes to the Consolidated Financial Statements On October 24, 2023, we amended the Credit Agreement to, among other things, (i) allow for an increase in total commitment amount from $ 400 million to $ 550 million ($ 250 million for performance letters of credit and $ 300 million for either borrowings or additional performance or financial letters of credit), (ii) extend maturity to October 24, 2028, subject to certain conditions, (iii) allow for dividends, share buybacks, and acquisitions which combined with other permitted transactions, are not to exceed a total net leverage ratio of 2.00 to 1.00 and an aggregate liquidity not less than $ 400 million, (iv) remove the minimum book value of assets requirement, (v) add Weatherford Switzerland as a borrower, and (vi) modify certain pricing provisions and eliminate secured overnight financing rate exposure to certain letters of credit. The amendment also gives the ability to request an increase in total commitments by up to $ 200 million, upon satisfaction of certain conditions. We further amended the Credit Agreement on December 20, 2023, to permit a certain specified swap transaction. As of December 31, 2023 , we had zero borrowings outstanding under the Credit Agreement, and $ 376 million of letters of credit outstanding, consisting of the $ 270 million ($ 218 million for performance letters of credit and $ 52 million for financial letters of credit) under the Credit Agreement and another $ 106 million under various uncommitted bi-lateral facilities (of which there was $ 101 million in cash collateral held and recorded in “Restricted Cash” on the 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 Consolidated Balance Sheets). Covenants for the 2028 Senior Secured Notes and 2030 Senior Notes and Credit Agreement The indentures governing the 2028 Senior Secured Notes and 2030 Senior Notes contain covenants that limit, among other things, our ability and the ability of certain of our subsidiaries, to: incur, assume or guarantee additional indebtedness; pay dividends or distributions on capital stock or redeem or repurchase capital stock; make investments; sell stock of our subsidiaries; transfer or sell assets; create liens; enter into transactions with affiliates; and enter into mergers or consolidations. The Company is subject to a $ 250 million minimum liquidity covenant which may increase up to $ 400 million dependent on the nature of transactions we may decide to enter into, a minimum interest coverage ratio of 2.50 to 1.00, a maximum total net leverage ratio of 3.50 to 1.00, and a maximum secured net leverage ratio of 1.50 to 1.00. The indentures also provide for certain customary events of default, including, among others, nonpayment of principal or interest, failure to pay final judgments in excess of a specified threshold, failure of a guarantee to remain in effect, bankruptcy and insolvency events, and cross acceleration, which would permit the principal, premium, if any, interest and other monetary obligations on all the then outstanding 2028 Senior Secured Notes to be declared due and payable immediately. The following is a summary of scheduled debt maturities by year: (Dollars in millions) Amount 2024 $ 168 2025 15 2026 14 2027 5 2028 98 Thereafter 1,601 Total Debt Maturities $ 1,901 Unamortized Debt Issuance and Discount $ ( 18 ) Total Debt Carrying Value $ 1,883 Weatherford International plc – 2023 Form 10-K | 66 Table of Contents Item 8 | Notes to the Consolidated Financial Statements 9 – Fair Value of Financial Instruments, Assets and Other Assets We estimate fair value at a price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal market for the asset or liability. Our valuation techniques require inputs that we categorize using a three-level hierarchy, from highest to lowest level of observable inputs. Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 inputs are quoted prices or other market data for similar assets and liabilities in active markets, or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based upon our own judgment and assumptions used to measure assets and liabilities at fair value. Classification of a financial asset or liability within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement. The fair values of our foreign currency forward contracts (see “Note 10 – Derivative Financial Instruments”), warrants (before their expiration, see “Note 14 – Shareholders’ Equity”), and plan assets of defined benefit pension plans (see “Note 11 – Employee Benefit Plans”) are all Level 2 valuations and the fair value of the credit default swap is a Level 3 valuation (see “Note 10 – Derivative Financial Instruments”). Our other financial instruments include cash and cash equivalents, accounts receivable, accounts payable, short-term borrowings and long-term debt. The carrying values of these financial instruments (excluding long-term debt) approximate their fair value due to their short maturities. The fair value of our long-term debt fluctuates with changes in applicable interest rates among other factors. Fair value will exceed carrying value when the current market interest rate is lower than the interest rate at which the debt was originally issued and will be less than the carrying value when the current market interest rate is greater than the interest rate at which the debt was originally issued. The fair value of our long-term debt (excluding Finance Leases) in the following table is classified as Level 2 in the fair value hierarchy and is established based on observable inputs in less active markets. December 31, 2023 December 31, 2022 (Dollars in millions) Carrying Value Fair Value Carrying Value Fair Value 11.00 % Exit Notes due 2024 $ — $ — $ 125 $ 128 6.5 % Senior Secured Notes due 2028 243 258 482 482 8.625 % Senior Notes due 2030 1,587 1,673 1,586 1,544 Long-Term Debt (excluding Finance Leases) $ 1,830 $ 1,931 $ 2,193 $ 2,154 Weatherford International plc – 2023 Form 10-K | 67 Table of Contents Item 8 | Notes to the Consolidated Financial Statements 10 – Derivative Financial Instruments Both our foreign currency forward contracts and the credit default swap are undesignated hedging instruments under ASC 815, Derivatives and Hedging . Foreign Currency Forward Contracts We enter into foreign currency forward contracts to economically hedge our exposure to currency fluctuations in various foreign currencies. At December 31, 2023 and December 31, 2022, we had outstanding foreign currency forward contracts with notional amounts aggregating to $ 448 million and $ 147 million, respectively. The fair values of these derivatives were not material as of December 31, 2023 and December 31, 2022. Credit Default Swap During the fourth quarter of 2023, we entered into a credit default swap (“CDS”) with a third-party financial institution terminating in February of 2026 related to a secured loan between that third-party financial institution and our largest customer in Mexico. The secured loan was utilized by this customer to pay certain of our outstanding receivables and accordingly, in the fourth quarter of 2023 and January of 2024, we received $ 140 million and $ 142 million, respectively. Under the CDS terms, within five business days upon notification of default, we could be required to pay the then outstanding notional balance net of recoveries. As of December 31, 2023 , we had a notional balance of $ 130 million outstanding under the CDS, which increased to $ 260 million in January of 2024, following the receipt of the $ 142 million payment. Management expects the total notional balance under the CDS to decrease to $ 161 million, $ 54 million and nil by December 31, 2024, December 31, 2025 and March 31, 2026, respectively. The fair value of this derivative was not material as of December 31, 2023. As of the date of this report, we are not aware of any events of default under the loan agreement between that third-party financial institution and our largest customer in Mexico. 11 – Employee Benefit Plans We have defined contribution plans covering certain employees. Contribution expenses related to these plans totaled $ 18 million, $ 18 million and $ 16 million for the years ended December 31, 2023, 2022 and 2021, respectively. We have defined benefit pension and other post-retirement benefit plans covering certain U.S. and international employees. Plan benefits are generally based on factors such as age, compensation levels and years of service. Net periodic benefit cost related to these plans totaled $ 3 million, $ 4 million, and $ 4 million for the years ended December 31, 2023, 2022 and 2021, respectively. The projected benefit obligations on a consolidated basis were $ 130 million and $ 121 million as of December 31, 2023 and December 31, 2022, respectively. The increase year over year is due primarily to actuarial losses as a result of decreased discount rates. The fair values of plan assets on a consolidated basis were $ 106 million and $ 97 million as of December 31, 2023 and December 31, 2022, respectively. The increase year over year is due primarily to investment gains. As of December 31, 2023 , the net underfunded obligation consisted of $ 18 million of funded obligations recorded to “Other Non-current Assets” and $ 42 million of underfunded obligations substantially all recorded to “Other Non-current Liabilities” on our Consolidated Balance Sheets. As of December 31, 2022, the net underfunded obligation consisted of $ 15 million of funded obligations recorded to “Other Non-current Assets” and $ 39 million of underfunded obligations substantially all recorded to “Other Non-current Liabilities” on our Consolidated Balance Sheets. Additionally, the consolidated pre-tax amount in accumulated other comprehensive income (loss) as of December 31, 2023 and December 31, 2022, that has not yet been recognized as a component of net periodic benefit cost was a net gain of $ 15 million and net gain of $ 19 million, respectively. As mentioned above, decreased discount rates were the primary driver of the overall loss in 2023. Weatherford International plc – 2023 Form 10-K | 68 Table of Contents Item 8 | Notes to the Consolidated Financial Statements The weighted average assumption rates used for benefit obligations were as follows: Year Ended December 31, 2023 2022 Discount rate: United States Plans 4.75 % - 5.00 % 4.75 % - 5.00 % International Plans 2.90 % - 11.38 % 2.84 % - 13.62 % Rate of Compensation Increase: United States Plans — — International Plans 2.00 % - 3.00 % 2.00 % - 7.22 % During each of the years ended December 31, 2023 , 2022 and 2021, we made contributions and paid direct benefits of $ 5 million in connection with our defined benefit pension and other post-retirement benefit plans. In 2024, we expect to fund approximately $ 5 million related to those plans. 12 – 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, which 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. 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 alleged 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 sought 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. On December 14, 2023, the Fifth Circuit affirmed the decision from the trial court dismissing plaintiffs’ claims. Weatherford International plc – 2023 Form 10-K | 69 Table of Contents Item 8 | Notes to the Consolidated Financial Statements 13 – Share-Based Compensation Share-Based Plan The Weatherford International plc Third Amended and Restated 2019 Equity Incentive Plan, (“2019 Equity Plan”) authorizes the issuance of 8.6 million shares of common stock by the Board of Directors in the form of options, share appreciation rights, restricted share awards, restricted share units (“RSUs”), performance-based restricted share units (“PSUs”), phantom restricted share units (“Phantom RSUs”) and other share-based and performance-based awards to any employee, consultant, or non-employee director (“Grantees”). The provisions of each award vary based on the type of award granted. Awards made under the 2019 Equity Plan vest and settle in shares of newly issued common stock or cash. As of December 31, 2023, there were 2.5 million shares available for future grants. We granted RSUs, PSUs, and Phantom RSUs under the 2019 Equity Plan. All awards generally require continued employment and generally vest over one to three years . The Grantees do not have the rights of a shareholder under these awards until such date as the shares are issued. Share-Based Compensation Expense Share-based compensation expense was $ 35 million for the year ended December 31, 2023, and $ 25 million each for the years ended December 31, 2022 and December 31, 2021. As of December 31, 2023, there was $ 44 million of unrecognized compensation cost, which is expected to be recognized over a weighted-average period of less than two years . Due to valuation allowances in the taxing jurisdictions of our Grantees, there was an immaterial related tax impact for the year ended December 31, 2023 and no related tax impact for the years ended December 31, 2022 and 2021. RSUs RSUs vest based generally on continued employment. The fair value of RSUs are determined based on the closing price of our shares on the date of grant. The total fair value, less forfeitures, is expensed over the vesting period. The weighted-average grant date fair value per unit (“WAGD FV”) of RSUs granted during 2023, 2022 and 2021 was $ 54.85 , $ 30.90 and $ 6.54 , respectively. The fair value of RSUs vested during 2023, 2022 and 2021 was $ 33 million, $ 18 million and $ 2 million, respectively. Cash used to settle RSUs in 2023 and 2022 was less than $ 1 million and $ 2 million, respectively. Cash was not used to settle RSUs in 2021. PSUs PSUs vest based generally on continued employment and achievement of an established target. The fair value of PSUs depends on whether the established target is a performance condition defined solely by reference to our own operations or the market performance of our shares (“market condition”). The actual number of PSUs earned is subject to increase or decrease based on the performance goal multiplier and may range from 0 % to 200 %. The total fair value, less forfeitures, is expensed over the vesting period. The WAGD FV per unit of PSUs granted during 2023, 2022 and 2021 was $ 70.91 , $ 23.14 and $ 12.62 , respectively. The fair value of PSUs vested during 2023, 2022 and 2021, was $ 118 million, nil and $ 2 million respectively. The fair value of PSUs subject to performance conditions defined solely by reference to our own operations is determined based on the closing price of our shares on the date of grant. The units are adjusted periodically based on the metric’s expected performance goal multiplier. Weatherford International plc – 2023 Form 10-K | 70 Table of Contents Item 8 | Notes to the Consolidated Financial Statements The fair value of PSUs subject to market conditions is determined by utilizing an advanced option-pricing model. All compensation cost is recognized if the employment condition is fulfilled even if the market condition is never satisfied, as the likelihood of achieving the market condition is incorporated into the fair value of the award. The weighted average of assumptions used in the models were as follows: Year Ended December 31, 2023 2022 2021 Risk-Free rate 3.8 % 3.2 % 0.8 % Dividend Yield n/a n/a n/a Expected Volatility 62.0 % 63.0 % 55.0 % Expected Life (in years) 2.6 2.5 3.2 The risk-free rate is obtained as of the grant date with terms matching the performance period. The dividend yield is based on historical dividend payments and expectations of management. For the year ended December 31, 2023, expected volatility incorporated our NASDAQ trading history along with the volatility of our constituents. For the years ended December 31, 2022 and 2021, the expected volatility was based on comparable companies’ volatility. The expected life in years is based on the performance measurement period. Phantom RSUs Phantom RSUs were exclusively granted in 2021. Due to achievement of the predetermined capped amounts in year one, the awards were cash-settled in 2022 for $ 14 million, and the remaining in 2023 for an immaterial amount. Summary of Awards Activity A summary of activity for non-vested RSUs, PSUs, and Phantom RSUs outstanding and their respective WAGD FV during 2023 is presented below. (Units in thousands, except dollars) RSU WAGD FV PSU (1) WAGD FV Phantom RSU WAGD FV Non-Vested at December 31, 2022 918 $ 21.05 2,301 $ 14.98 17 $ 14.50 Granted 350 54.85 342 70.91 — — Vested ( 579 ) 15.30 ( 917 ) 6.12 ( 4 ) 16.47 Cancelled or Forfeited ( 24 ) 35.00 ( 55 ) 23.78 ( 13 ) 13.86 Non-Vested at December 31, 2023 665 $ 43.34 1,671 $ 31.00 — $ — (1) Vested PSUs during 2023 earned a 200 % multiplier. Non-Vested PSUs at December 31, 2023 were comprised of 1,145 PSUs with an achieved 100 % performance goal multiplier and 526 PSUs with the potential for up to a 200 % performance goal multiplier. Weatherford International plc – 2023 Form 10-K | 71 Table of Contents Item 8 | Notes to the Consolidated Financial Statements 14 – Shareholders’ Equity Our ordinary shares outstanding for the years ended December 31, 2023 , 2022 and 2021 primarily increased upon the vesting and settlement of awards made under the 2019 Equity Plan. On December 13, 2019, the day we emerged from bankruptcy, we issued warrants allowing the holders to purchase up to an aggregate of 7,777,779 ordinary shares in the Company, par value $ 0.001 , at an exercise price of $ 99.96 per ordinary share. The warrants were equity classified and, upon issuance, had a value of $ 31 million, which was recorded in “Capital in Excess of Par Value.” The warrant fair value was a Level 2 valuation and was estimated using the Black Scholes valuation model. Inputs to the model included Weatherford’s share price, volatility of our share price, and the risk-free interest rate. On December 13, 2023, the remaining 7,774,134 unexercised warrants expired, and the rights of the warrant holders to purchase ordinary shares were terminated. During 2023 and 2022, an immaterial number of warrants were exercised. Accumulated Other Comprehensive Loss The following table presents the changes in our accumulated other comprehensive loss by component: (Dollars in millions) Foreign Currency Translation Defined Benefit Pension Total Balance at December 31, 2021 $ ( 36 ) $ 1 $ ( 35 ) Other Comprehensive (Loss) Income ( 5 ) 18 13 Balance at December 31, 2022 ( 41 ) 19 ( 22 ) Other Comprehensive Loss ( 2 ) ( 4 ) ( 6 ) Balance at December 31, 2023 $ ( 43 ) $ 15 $ ( 28 ) Weatherford International plc – 2023 Form 10-K | 72 Table of Contents Item 8 | Notes to the Consolidated Financial Statements 15 – Income (Loss) per Share A reconciliation of the number of weighted average shares used for the basic and diluted income (loss) per share calculation for the periods presented was as follows: Year Ended December 31, (Shares in millions) 2023 2022 2021 Net Income (Loss) Attributable to Weatherford $ 417 $ 26 $ ( 450 ) Basic Weighted Average Shares Outstanding 72 71 70 Dilutive Effect of Awards Granted in Stock Incentive Plans 2 1 — Diluted Weighted Average Shares Outstanding 74 72 70 Basic Income (Loss) Per Share Attributable to Weatherford $ 5.79 $ 0.37 $ ( 6.43 ) Diluted Income (Loss) Per Share Attributable to Weatherford $ 5.66 $ 0.36 $ ( 6.43 ) Antidilutive Weighted Average Shares: Warrants 7 8 8 Equity Awards 1 — 2 Total Antidilutive Weighted Average Shares 8 8 10 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. Our basic and dilutive weighted average shares outstanding for the period presented with a net loss are equivalent as the inclusion of potential dilutive securities is antidilutive. Antidilutive shares represent securities that could dilute income (loss) per share, which are excluded from the computation as their impact was antidilutive. As discussed in “Note 14 – Shareholders’ Equity”, warrants to purchase 7.8 million ordinary shares at $ 99.96 per share were issued on December 13, 2019 and expired on December 13, 2023. The warrants were excluded from the diluted weighted average shares outstanding as the exercise price of the warrants was greater than the average market price of the Company’s ordinary shares. Weatherford International plc – 2023 Form 10-K | 73 Table of Contents Item 8 | Notes to the Consolidated Financial Statements 16 – Income Taxes We provide for income taxes based on the laws and rates in effect in the countries in which operations are conducted, or in which we or our subsidiaries are considered resident for income tax purposes. The relationship between our pre-tax income or loss and our income tax provision or benefit varies from period to period as a result of various factors which include changes in total pre-tax income or loss, the jurisdictions in which our income is earned, the tax laws in those jurisdictions and in our operating structure. Our income tax provision consisted of the following: Year Ended December 31, (Dollars in millions) 2023 2022 2021 Total Current Provision $ ( 143 ) $ ( 83 ) $ ( 96 ) Total Deferred (Provision) Benefit 86 ( 4 ) 10 Income Tax Provision $ ( 57 ) $ ( 87 ) $ ( 86 ) The difference between the Irish income tax provision and the consolidated income tax provision is analyzed below: Year Ended December 31, (Dollars in millions) 2023 2022 2021 Irish Income Tax (Provision) Benefit Tax Rate of 25% $ ( 126 ) $ ( 35 ) $ 86 Tax Provision on Operating Earnings/Losses Subject to Rates Different than the Irish Income Tax Rate 52 ( 155 ) ( 189 ) Tax (Provision) Benefit on Swiss Loss from internal liquidation of subsidiary and internal restructuring 48 ( 141 ) 124 Decrease (Increase) in Valuation Allowance attributed to Swiss Loss and internal restructuring ( 46 ) 141 ( 124 ) Decrease (Increase) in Valuation Allowance on Operating Earnings/Losses 35 64 52 Change in Uncertain Tax Positions ( 20 ) 39 ( 35 ) Income Tax Provision $ ( 57 ) $ ( 87 ) $ ( 86 ) Our income tax provisions generally do not correlate to our consolidated income (loss) before tax. Our income tax provisions are primarily driven by profits in certain jurisdictions, deemed profit countries and withholding taxes on intercompany and third-party transactions that do not directly correlate to ordinary income or loss. Certain charges and impairments recognized do not result in significant tax benefit as a result of being attributed to a non-income tax jurisdiction or our inability to forecast realization of the tax benefit of such losses. For the year ended December 31, 2023, income tax expense was lower by $ 93 million, due to the release of valuation allowances where deferred tax assets are now considered more likely than not to be realized in the future, and $ 22 million, due to the recognition of a benefit from previously uncertain tax positions throughout the year. Those benefits were offset by the establishment of valuation allowances of approximately $ 50 million against the loss on the sale of Blue Chip Swap securities and currency devaluation in Argentina (see Note 17 – Blue Chip Swap Securities - Argentina). During the year ended December 31, 2022, income tax expense was lower by $ 35 million, due to the release of valuation allowances and $ 27 million, due to the recognition of a benefit from previously uncertain tax positions. Deferred tax assets and liabilities are recognized for the estimated future tax effects of temporary differences between the tax basis of an asset or liability and its reported amount in the Consolidated Financial Statements. The measurement of deferred tax assets and liabilities is based on enacted tax laws and rates currently in effect in each of the jurisdictions in which we have operations. Weatherford International plc – 2023 Form 10-K | 74 Table of Contents Item 8 | Notes to the Consolidated Financial Statements The components of the net deferred tax asset were as follows: December 31, December 31, (Dollars in millions) 2023 2022 Deferred Tax Assets: Net Operating Losses Carryforwards $ 715 $ 751 Unused Recognized Built in Losses 46 43 Accrued Liabilities and Reserves 191 143 Tax Credit Carryforwards 10 11 Employee Benefits 38 29 Property, Plant and Equipment 145 158 Inventory 33 38 U.S. Interest Deferral 59 57 Tax Base Adjustment 59 State Deferred 62 50 Other Differences between Financial and Tax Basis 108 89 Valuation Allowance ( 1,316 ) ( 1,300 ) Total Deferred Tax Assets 150 69 Deferred Tax Liabilities: Intangible Assets ( 18 ) ( 28 ) Total Deferred Tax Liabilities ( 18 ) ( 28 ) Net Deferred Tax Asset $ 132 $ 41 We record deferred tax assets for net operating losses and temporary differences between the book and tax basis of assets and liabilities that are expected to produce tax deductions in future periods. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income in the appropriate tax jurisdiction during the periods in which those deferred tax assets would be deductible. The Company assesses the realizability of its deferred tax assets each period by considering whether it is more likely than not that all or a portion of the deferred tax assets will not be realized. The Company considers all available evidence (both positive and negative) when determining whether a valuation allowance is required, with emphasis on our past operating results, the existence of cumulative losses in the most recent years and our forecast of near- term taxable income. The Company evaluates possible sources of taxable income that may be available to realize the benefit of deferred tax assets, including projected future taxable income, the reversal of existing temporary differences, taxable income in carryback years and available tax planning strategies, in making this assessment. The valuation allowance increased by $ 16 million in 2023. Approximately $ 11 million of the increase was recorded to tax expense and was primarily attributable to the Argentina items discussed above and the Switzerland items discussed below, offset by the release of valuation allowance and the utilization of net operating losses previously not expected to be realized against operating earnings of $ 20 million. The remaining $ 5 million of the increase in the valuation allowance was attributable to foreign currency translation. Deferred income taxes generally have not been recognized on the cumulative undistributed earnings of our non-Irish subsidiaries because they are considered to be indefinitely reinvested. Distribution of these earnings in the form of dividends or otherwise may result in a combination of income and withholding taxes payable in various countries. As of December 31, 2023 , the pool of positive undistributed earnings of our non-Irish subsidiaries that are considered indefinitely reinvested and may be subject to tax, if distributed, amounts to approximately $ 1.4 billion. Due to complexities in the tax laws and the manner of repatriation, it is not practicable to estimate the unrecognized amount of deferred income taxes and the related dividend withholding taxes associated with these undistributed earnings. Weatherford International plc – 2023 Form 10-K | 75 Table of Contents Item 8 | Notes to the Consolidated Financial Statements At December 31, 2023 , we had approximately $ 3.6 billion of net operating losses (“NOLs”) in various jurisdictions. Our non-indefinite loss carryforwards, if not utilized, will mostly expire for U.S. subsidiaries from 2030 through 2037 and at various dates from 2024 through 2043 for non-U.S. subsidiaries. Upon emergence from bankruptcy in December 2019, our U.S. subsidiaries experienced an ownership change as the Company’s emergence was considered an “ownership change” for purposes of Internal Revenue Code section 382. The Internal Revenue Code sections 382 and 383 impose limitations on the ability of a company to utilize tax attributes after experiencing an “ownership change.” As a result, we estimated our annual limitation is approximately $ 23 million against the utilization of our U.S. loss carryforwards and other tax attributes, including unused recognized built-in losses and U.S. interest deferral. Upon emergence, we estimated that the maximum U.S. NOLs available for utilization in the future was $ 713 million as of December 31, 2019. In 2021, we executed a liquidation transaction of one of our Swiss holding companies which resulted in the forfeiture of impairment losses of $ 1.3 billion generated in 2020. In addition, the liquidation transaction resulted in approximately $ 5.6 billion of tax losses (NOLs) in Switzerland of which $ 3.4 billion was deemed worthless and excluded from the deferred tax table, and $ 2.2 billion was recorded as an NOL and included in the table as management expects to utilize those NOLs on our future tax returns. However, in addition to recording a deferred tax asset of $ 303 million related to the $ 2.2 billion tax losses, we recorded a valuation allowance against the full $ 303 million because it will offset future income that is otherwise exempt from tax. In 2023, we recognized a deferred tax asset of $ 59 million relating to a final agreement with the taxing authorities in relation to an adjustment in tax base beginning of 2021, and we recorded a $ 57 million valuation allowance against the deferred tax asset as it is more likely than not that a majority of it will not be realized. A tabular reconciliation of the total amounts of uncertain tax positions at the beginning and end of the period is as follows: Year Ended December 31, (Dollars in millions) 2023 2022 2021 Balance at Beginning of Year $ 191 $ 235 $ 222 Additions as a Result of Tax Positions Taken During a Prior Period 9 14 23 Reductions as a Result of Tax Positions Taken During a Prior Period ( 12 ) ( 15 ) ( 8 ) Additions as a Result of Tax Positions Taken During the Current Period 19 11 12 Reductions Relating to Settlements with Taxing Authorities ( 3 ) ( 36 ) ( 5 ) Reductions as a Result of a Lapse of the Applicable Statute of Limitations ( 6 ) ( 11 ) ( 2 ) Foreign Exchange Effects 5 ( 7 ) ( 7 ) Balance at End of Year $ 203 $ 191 $ 235 Substantially all of the uncertain tax positions, if released in future periods, would impact our effective tax rate. Within the total balance is $ 37 million and $ 38 million as of December 31, 2023 , and 2022, respectively, that would be offset by net operating losses and other tax attributes if settled. Our income tax provision includes penalties and interest expense (benefit) on uncertain tax positions of $ 12 million, $( 2 ) million and $ 17 million for years ended December 31, 2023 , 2022, and 2021, respectively. The expense of $ 12 million in 2023 includes $( 11 ) million of interest and penalty release related to benefit from previously uncertain tax positions. The amounts in the table above exclude cumulative accrued interest and penalties of $ 115 million and $ 98 million at December 31, 2023 and 2022 respectively, which are included in other non-current liabilities. Weatherford International plc – 2023 Form 10-K | 76 Table of Contents Item 8 | Notes to the Consolidated Financial Statements We are subject to income tax in many of the approximately 75 countries where we operate. As of December 31, 2023 , the following table summarizes the tax years that remain subject to examination for the major jurisdictions in which we operate: Tax Jurisdiction Tax Years under Examination Argentina 2013 - 2023 Canada 2015 - 2023 Mexico 2013 - 2023 Russia 2020 - 2023 Saudi Arabia 2019 - 2023 Switzerland 2019 - 2023 United States (Federal) 2020 - 2023 We are continuously under tax examination in various jurisdictions and cannot predict the timing or outcome regarding the resolutions or if they will have a material impact on our financial statements. As of December 31, 2023 , we anticipate that it is reasonably possible that the amount of uncertain tax positions may decrease by up to $ 13 million in the next twelve months due to expiration of statutes of limitations, settlements and/or conclusions of tax examinations. 17 – 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. An indirect foreign exchange mechanism known as a Blue Chip Swap (“BCS”) allows entities to remit U.S. dollars from Argentina through the purchase and sale of BCS securities. During the second quarter of 2023, we completed a series of BCS transactions at implied exchange rates (“BCS rates”) that were approximately 106 % higher than the official exchange rate resulting in a loss of $ 57 million. 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 rates do not meet the criteria for remeasurement under U.S. GAAP. 18 – Subsequent Event On February 1, 2024, we entered into merger agreements to acquire ISI Holding Company, LLC and Probe Technologies Holdings, Inc., which will strengthen our existing wireline business within our DRE segment. The purchase price was $ 6 million in cash and 844,702 of our ordinary shares, subject to customary adjustments. In addition, subject to the achievement of certain earnout targets, we agreed to an additional consideration of (a) up to another 30,298 of our ordinary shares and (b) up to $ 12 million in cash or ordinary shares using the volume-weighted average price of our shares over five consecutive trading days from June 24 to June 28 of 2024. Weatherford International plc – 2023 Form 10-K | 77 Table of Contents Item 9 | Changes in and Disagreement with Accountants on Accounting and Financial Disclosure Item 9. Changes in and Disagreement with Accountants on Accounting and Financial Disclosure. None.