What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-10-23 compared with 2024-07-24 · 121 added, 99 removed, 211 unchanged (51% of the section changed)

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The table below shows the average oil and natural gas prices for West Texas Intermediate (“WTI”), Brent North Sea (“Brent”) crude oil and Henry Hub natural gas.

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

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The table below shows historical average rig counts based on the weekly Baker Hughes Company rig count information.

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

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Russia Ukraine Conflict

On February 24, 2022, the military conflict between Russia and Ukraine (“Russia Ukraine Conflict”) began and in response we evaluated, and continue to evaluate, our operations, with the priority being centered on the safety and well-being of our employees in the impacted regions, as well as operating in full compliance with applicable international laws and sanctions.

Revenues in Russia were approximately 5% of our total revenues for the three and six months ended June 30, 2024, compared to 6% of our total revenues for the three and six months ended June 30, 2023.

As of June 30, 2024, our Russia operations included $84 million in cash, $100 million in other current assets, $78 million in property, plant and equipment and other non-current assets, and $54 million in liabilities.

In February 2022, the military conflict between Russia and Ukraine (“Russia Ukraine Conflict”) began and in response we evaluated, and continue to evaluate, our operations, with the priority being centered on the safety and well-being of our employees in the impacted regions, as well as operating in full compliance with applicable international laws and sanctions.

Revenues in Russia were approximately 6% and 5% of our total revenues for the three and nine months ended September 30, 2024, compared to 6% of our total revenues for both the three and nine months ended September 30, 2023.

As of September 30, 2024, our Russia operations included $94 million in cash, $98 million in other current assets, $69 million in property, plant and equipment and other non-current assets, and $51 million in liabilities.

As of December 31, 2023, our Russia operations included $62 million in cash, $94 million in other current assets, $76 million in property, plant and equipment and other non-current assets, and $62 million in liabilities.

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• potential nationalization of the business.

Conflicts in the Middle East

We are monitoring the recent escalation of conflicts in the Middle East as there is a renewed and heightened risk of operational disruption, including personnel movement, supply chain and logistics.

Consolidated Statements of Operations - Operating Summary

Revenues of $1.4 billion and $2.8 billion in the three and six months ended June 30, 2024, increased 10% and 12% compared to $1.3 billion and $2.5 billion in the three and six months ended June 30, 2023, respectively.

Year-over-year in the second quarter, product revenues increased 13% and service revenues increased 9%.

WCC, DRE, and PRI contributed 49%, 25%, and 2% of the increase in revenues, respectively.

The remaining revenue increase was due to higher activity in integrated services and projects.

Year-over-year in the six months ended June 30, 2024, product revenues increased 12% and service revenues 13%.

Revenues of $1.4 billion and $4.2 billion in the three and nine months ended September 30, 2024, increased 7% and 11% compared to $1.3 billion and $3.8 billion in the three and nine months ended September 30, 2023, respectively.

Year-over-year in the third quarter, product revenues increased 6% and service revenues increased 8%.

WCC and DRE contributed 52% and 49% of the increase in revenues, respectively, with PRI essentially flat.

Year-over-year in the nine months ended September 30, 2024, product revenues increased 10% and service revenues 11%.

WCC, DRE, and PRI contributed 38%, 33%, and 1% of the increase in revenues, respectively.

The remaining revenue increase was due to higher activity in integrated services and projects.

Geographically, the year-over-year second quarter revenue growth was led by improvements in the Middle East/North Africa/Asia and Europe/Sub-Sahara Africa/Russia regions, which contributed to 92% and 31% of the increase, respectively, partly offset by a revenue decline in Latin America and North America.

Year-over-year in the six months ended June 30, 2024, revenue growth was led by improvements in the Middle East/North Africa/Asia, Europe/Sub-Sahara Africa/Russia, and Latin America regions, which contributed to 80%, 19% and 12% of the increase, respectively, partly offset by a revenue decline in North America.

Operating income of $264 million and $497 million in the three and six months ended June 30, 2024, increased 31% and 29% compared to $201 million and $386 million in the three and six months ended June 30, 2023, respectively, primarily driven by improved operational efficiencies from increased resource utilization in addition to gains on sales of used rental equipment.

Cost of products and services of $891 million and $1.8 billion in the three and six months ended June 30, 2024, increased 5% and 8% compared to $847 million and $1.6 billion in the three and six months ended June 30, 2023, respectively.

Our cost of products and services as a percentage of revenues was 63% and 64% in the three and six months ended June 30, 2024 compared to 66% and 67% in the three and six months ended June 30, 2023, respectively, reflecting improved utilization on a more efficient operating cost structure.

Average oil prices in the three months ended June 30, 2024 increased by 11% for West Texas Intermediate crude oil and 8% for Brent North Sea crude oil and in the six months ended June 30, 2024 increased by 6% for West Texas Intermediate crude oil and 5% for Brent North Sea crude oil compared to the same periods in 2023, respectively.

Average Henry Hub natural gas prices in the three months ended June 30, 2024 decreased 4% and in the six months ended June 30, 2024, decreased by 12%, compared to the same periods in 2023, respectively.

Global rig counts for the three and six months ended June 30, 2024 decreased by 5% compared to both the same periods in 2023, respectively, driven by a decrease in North America.

The remaining revenue increase year-over-year year-to-date was due to higher activity in integrated services and projects.

Geographically, the year-over-year third quarter revenue growth was led by improvements in the Middle East/North Africa/Asia, Europe/Sub-Sahara Africa/Russia and Latin America regions, which contributed to 74%, 28% and 1% of the increase, respectively, partly offset by a revenue decline in North America.

Year-over-year in the nine months ended September 30, 2024, revenue growth was led by improvements in the Middle East/North Africa/Asia, Europe/Sub-Sahara Africa/Russia, and Latin America regions, which contributed to 78%, 21% and 9% of the increase, respectively, partly offset by a revenue decline in North America.

Operating income of $243 million and $740 million in the three and nine months ended September 30, 2024, increased 11% and 23% compared to $218 million and $604 million in the three and nine months ended September 30, 2023, respectively, primarily driven by improved operational efficiencies from increased resource utilization in addition to gains on sales of used rental equipment.

Cost of products and services of $917 million and $2.7 billion in the three and nine months ended September 30, 2024, increased 7% and 8% compared to $859 million and $2.5 billion in the three and nine months ended September 30, 2023, respectively.

Our cost of products and services as a percentage of revenues was 65% in both the three and nine months ended September 30, 2024 compared to 65% and 66% in the three and nine months ended September 30, 2023, respectively.

Average oil prices in the three months ended September 30, 2024 decreased by 7% for West Texas Intermediate crude oil and 8% for Brent North Sea crude oil, and in the nine months ended September 30, 2024 increased by 1% for both West Texas Intermediate crude oil and Brent North Sea crude oil compared to the same periods in 2023, respectively.

Average Henry Hub natural gas prices in the three months ended September 30, 2024 decreased by 19% and in the nine months ended September 30, 2024, decreased by 15%, compared to the same periods in 2023, respectively.

Global rig counts for the three and nine months ended September 30, 2024 decreased by 3% and 5% compared to the same periods in 2023, respectively, driven by a decrease in North America.

The year-over-year decrease in both the Henry Hub natural gas prices and North America rig count reflects the lower market demand and oversupply of natural gas in the region.

Selling, general, administrative and research and development costs of $247 million and $483 million in the three and six months ended June 30, 2024, increased 10% in both periods compared to $225 million and $441 million in the three and six months ended June 30, 2023, respectively.

The increase primarily reflects an increase in overhead to support organization growth and an increase in research and development on newer technologies.

Selling, general, administrative and research and development costs as a percentage of revenues was 18% in both the three and six months ended June 30, 2024, and in both the three and six months ended June 30, 2023.

Selling, general, administrative and research and development costs of $236 million and $719 million in the three and nine months ended September 30, 2024, decreased 2% and increased 5% compared to $241 million and $682 million in the three and nine months ended September 30, 2023, respectively.

The third quarter decrease year-over-year was primarily due to a decrease in employee incentive programs.

The year-to-date increase year-over-year primarily reflects an increase in overhead to support organization growth and an increase in research and development on newer technologies.

Selling, general, administrative and research and development costs as a percentage of revenues was 17% in both the three and nine months ended September 30, 2024, and 18% in both the three and nine months ended September 30, 2023.

Other charges (credits) in the three and nine months ended September 30, 2024 were $13 million and $21 million in net charges, respectively, and primarily includes fees to third-party financial institutions to facilitate loans between those financial institutions and our largest customer in Mexico, who in turn paid certain of our outstanding receivables.

Other charges (credits) in the three and nine months ended September 30, 2023 were $5 million and $9 million in net credits, respectively.

Consolidated Statements of Operations - Non-Operating Summary

Interest Expense, Net

Interest expense, net was $24 million and $53 million in the three and six months ended June 30, 2024, respectively, and $31 million and $62 million in the three and six months ended June 30, 2023, respectively.

Interest expense, net was $24 million and $77 million in the three and nine months ended September 30, 2024, respectively, and $30 million and $92 million in the three and nine months ended September 30, 2023, respectively.

Interest expense, net is interest expense net of interest income.

Interest expense of $41 million and $84 million in the three and six months ended June 30, 2024, respectively, and $47 million and $94 million in the three and six months ended June 30, 2023, respectively, decreased primarily due to the reduction in our outstanding long-term debt.

As of June 30, 2024, we have fully repaid our outstanding 2028 Senior Secured Notes.

Interest expense of $37 million and $121 million in the three and nine months ended September 30, 2024, respectively, and $45 million and $139 million in the three and nine months ended September 30, 2023, respectively, decreased primarily due to the reduction in our outstanding long-term debt.

As of September 30, 2024, we have fully repaid our outstanding 2028 Senior Secured Notes.

See “Note 6 – Borrowings and Other Debt Obligations” to our Condensed Consolidated Financial Statements for additional details.

Interest income was $17 million and $31 million in the three and six months ended June 30, 2024, respectively, and $16 million and $32 million in the three and six months ended June 30, 2023.

Interest income was $13 million and $44 million in the three and nine months ended September 30, 2024, respectively, and $15 million and $47 million in the three and nine months ended September 30, 2023.

Loss on Blue Chip Swap Securities

An indirect foreign exchange mechanism known as the Blue Chip Swap (“BCS”) allows entities to remit U.S.

dollars from Argentina through the purchase and sale of securities.

We entered into a series of BCS securities transactions that resulted in a “Loss on Blue Chip Swap Securities” of $10 million in the three and six months ended June 30, 2024 and $57 million in the three and six months ended June 30, 2023.

dollars from operations in Argentina.

No BCS transactions were executed during the third quarter of 2024 or 2023.

During the second quarter of 2024 and 2023, we entered into a series of BCS securities transactions that resulted in a “Loss on Blue Chip Swap Securities” of $10 million in the nine months ended September 30, 2024 and $57 million in the nine months ended September 30, 2023, respectively.

See “Note 12 – Blue Chip Swap Securities - Argentina” to our Condensed Consolidated Financial Statements for additional details.

Other Expense, Net

Other expense, net was $20 million and $42 million in the three and six months ended June 30, 2024, respectively, and $39 million and $74 million in the three and six months ended June 30, 2023, respectively.

Other expense, net was $41 million and $83 million in the three and nine months ended September 30, 2024, respectively, and $24 million and $98 million in the three and nine months ended September 30, 2023, respectively.

Other expense, net primarily represents foreign exchange losses in countries with no or limited markets to hedge, letter of credit fees and other financing charges, including when applicable, bond redemption premiums partially offset by certain investment gains and losses.

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Three Months Ended (Unfavorable)

June 30, $ % or bps

September 30, $ % or bps

(Dollars in millions) 2024 2023 Change

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PRI Segment Adjusted EBITDA Margin 22.4 % 23.2 % n/m (81) bps

Six Months Ended (Unfavorable)

June 30, $ % or bps

Nine Months Ended (Unfavorable)

September 30, $ % or bps

(Dollars in millions) 2024 2023 Change

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PRI Segment Adjusted EBITDA Margin 22.2 % 21.6 % n/m 51 bps

DRE revenues of $427 million and $849 million in the three and six months ended June 30, 2024, increased $33 million or 8%, and increased $83 million or 11%, compared to $394 million and $766 million in the three and six months ended June 30, 2023, respectively.

Of the second quarter year-over-year revenue increase, approximately 85% was from wireline activity after business acquisitions in the first quarter of 2024.

Geographically, the Middle East/North Africa/Asia and Europe/Sub-Sahara Africa/Russia regions contributed approximately 65% and 35%, respectively, to the regions with revenue growth, offset by a revenue decline in the Latin America region, primarily from project delays.

Of the year-to-date year-over-year increase, approximately 65% was from wireline activity, and geographically, the Middle East/North Africa/Asia and Europe/Sub-Sahara Africa/Russia regions contributed approximately 60% and 40%, respectively, to the regions with revenue growth, offset by a revenue decline in the Latin America region.

DRE segment adjusted EBITDA of $130 million and $260 million in the three and six months ended June 30, 2024, increased $24 million or 23%, and increased $46 million or 21%, compared to $106 million and $214 million in the three and six months ended June 30, 2023.

DRE segment adjusted EBITDA margin was 30.4% and 30.6% in the three and six months ended June 30, 2024 compared to 26.9% and 27.9% in the three and six months ended June 30, 2023.

The improvement in segment adjusted EBITDA was primarily due to timing of certain higher margin international managed pressure drilling activity, including certain sales of used rental equipment, which more than offset the decrease in Latin America project delays.

WCC revenues of $504 million and $962 million in the three and six months ended June 30, 2024, increased $64 million or 15%, and increased $101 million or 12%, compared to $440 million and $861 million in the three and six months ended June 30, 2023, respectively.

Of the second quarter year-over-year revenue increase, approximately 70% was from completions and liner hanger activity, primarily from the timing of deliveries.

Geographically, the Middle East/North Africa/Asia region contributed approximately 90% to the overall revenue growth.

Of the year-to-date year-over-year revenue increase, approximately 45% was from liner hangers and tubular running services activity and approximately 40% was from completions activity.

DRE revenues of $435 million and $1,284 million in the three and nine months ended September 30, 2024, increased $47 million or 12%, and increased $130 million or 11%, compared to $388 million and $1,154 million in the three and nine months ended September 30, 2023, respectively.

Of the third quarter year-over-year revenue increase, approximately 50% was from wireline activity after business acquisitions in the first quarter of 2024 and approximately 35% from drilling-related services activity.

Geographically, the Middle East/North Africa/Asia and the North America regions contributed approximately 65% and 30%, respectively, partly offset by a revenue decline in the Latin America region.

Of the year-to-date year-over-year revenue increase, approximately 60% was from wireline activity and approximately 30% from drilling-related services.

Geographically, the Middle East/North Africa/Asia and Europe/Sub-Sahara Africa/Russia regions contributed approximately 65% and 35%, respectively, partly offset by a revenue decline in the Latin America region.

DRE segment adjusted EBITDA of $111 million and $371 million in the three and nine months ended September 30, 2024, was flat compared to $111 million in the three months ended September 30, 2023 and increased $46 million or 14%, compared to $325 million in the nine months ended September 30, 2023.

DRE segment adjusted EBITDA margin was 25.5% and 28.9% in the three and nine months ended September 30, 2024 compared to 28.6% and 28.2% in the three and nine months ended September 30, 2023.

The third quarter segment adjusted EBITDA remained flat with increased drilling-related services activity offset by lower margin fall through in wireline and managed pressure drilling.

The year-to-date year-over-year improvement in segment adjusted EBITDA was primarily due to higher margin international managed pressure drilling activity, including

certain sales of used rental equipment.

WCC revenues of $509 million and $1,471 million in the three and nine months ended September 30, 2024, increased $50 million or 11%, and increased $151 million or 11%, compared to $459 million and $1,320 million in the three and nine months ended September 30, 2023, respectively.

Of the third quarter year-over-year revenue increase, approximately 55% was from completions activity and approximately 30% from liner hangers activity, partly offset by a revenue decline from lower cementation products activity.

Geographically, international regions drove revenue growth and the Middle East/North Africa/Asia region contributed approximately 70% of the international growth and the Latin America and Europe/Sub-Sahara Africa/Russia regions contributed equally to remaining international growth.

This was partly offset by a revenue decline in the North America region.

Of the year-to-date year-over-year revenue increase, approximately 45% was from completions activity and approximately 45% was from liner hangers and tubular running services activity.

Geographically, international regions drove the revenue growth and the Middle East/North Africa/Asia region contributed approximately 80% of the international growth.

This was partly offset by a revenue decline in North America, primarily on account of lower demand in that region.

WCC segment adjusted EBITDA of $145 million and $265 million in the three and six months ended June 30, 2024, increased $36 million or 33%, and increased $60 million or 29%, compared to $109 million and $205 million in the three and six months ended June 30, 2023, respectively.

WCC segment adjusted EBITDA margin was 28.8% and 27.5% in the three and six months ended June 30, 2024, compared to 24.8% and 23.8% in the three and six months ended June 30, 2023.

The increase in revenue and segment adjusted EBITDA was primarily from higher completions activity.

PRI revenues of $369 million and $717 million in the three and six months ended June 30, 2024, increased $3 million and $2 million, compared to $366 million and $715 million in the three and six months ended June 30, 2023, respectively.

Of the second quarter year-over-year revenue increase, the modest increase in intervention services and drilling tools was partly offset by a decline in artificial lift activity .

Geographically, revenue growth in the Europe/Sub-Sahara Africa/Russia and Middle East/North Africa/Asia regions was offset by a decline in the North America and Latin America regions.

Of the year-to-date year-over-year revenue increase, the modest increase in intervention services and drilling tools was partly offset by a decline in artificial lift and pressure pumping activity .

Geographically, revenue growth in the Europe/Sub-Sahara Africa/Russia and Middle East/North Africa/Asia regions was offset by a decline in North America.

PRI segment adjusted EBITDA of $85 million and $158 million in the three and six months ended June 30, 2024, increased $4 million or 5% and increased $9 million or 6% compared to $81 million and $149 million in the three and six months ended June 30, 2023, respectively.

PRI segment adjusted EBITDA margin was 23.0% and 22.0% in the three and six months ended June 30, 2024, compared to 22.1% and 20.8% in the three and six months ended June 30, 2023.

The increase in revenue and segment adjusted EBITDA was primarily from higher artificial lift activity.

This was partly offset by a revenue decline in the North America region.

WCC segment adjusted EBITDA of $151 million and $416 million in the three and nine months ended September 30, 2024, increased $32 million or 27%, and increased $92 million or 28%, compared to $119 million and $324 million in the three and nine months ended September 30, 2023, respectively.

WCC segment adjusted EBITDA margin was 29.7% and 28.3% in the three and nine months ended September 30, 2024, compared to 25.9% and 24.5% in the three and nine months ended September 30, 2023.

The increase in revenue and segment adjusted EBITDA was primarily from higher activity.

PRI revenues of $371 million and $1,088 million in the three and nine months ended September 30, 2024, was flat and increased $2 million, compared to $371 million and $1,086 million in the three and nine months ended September 30, 2023, respectively.

Revenue in the third quarter remained flat from prior year and consisted of intervention services and drilling tools activity, offset by a decline in pressure pumping activity.

Geographically, revenue growth in the Europe/Sub-Sahara Africa/Russia region was offset by a decline primarily in the North America region.

Of the year-to-date year-over-year revenue increase, revenue growth in intervention services and drilling tools was partly offset by a decline in primarily pressure pumping as well as a decline in artificial lift activity.

Geographically, revenue growth primarily in the Europe/Sub-Sahara Africa/Russia region as well as in the Middle East/North Africa/Asia region was offset by a decline in the North America region.

PRI segment adjusted EBITDA of $83 million and $241 million in the three and nine months ended September 30, 2024, decreased $3 million or 3% and increased $6 million or 3% compared to $86 million and $235 million in the three and nine months ended September 30, 2023, respectively.

PRI segment adjusted EBITDA margin was 22.4% and 22.2% in the three and nine months ended September 30, 2024, compared to 23.2% and 21.6% in the three and nine months ended September 30, 2023.

The third quarter year-over-year decrease in segment adjusted EBITDA was primarily due to a decline in pressure pumping activity.

The year-to-date year-over-year improvement in segment adjusted EBITDA was primarily from higher margin international artificial lift activity.

All Other Results

All Other results were from non-core business activities that do not individually meet the criteria for segment reporting, including integrated services and projects, which includes pass through and project management services.

All Other revenues of $105 million and $235 million in the three and six months ended June 30, 2024, compared to $74 million and $118 million in the three and six months ended June 30, 2023.

The year-over-year increase was primarily from our integrated services and projects in the Middle East/North Africa/Asia and Latin America regions.

Corporate was a net expense of $18 million and $32 million in the three and six months ended June 30, 2024 compared to $14 million and $26 million in the three and six months ended June 30, 2023.

The year-over-year increase in expense was primarily due to an increase in certain professional fees.

All Other revenues of $94 million and $329 million in the three and nine months ended September 30, 2024, compared to $95 million and $213 million in the three and nine months ended September 30, 2023.

The year-to-date year-over-year increase was primarily from of our integrated services and projects in the Middle East/North Africa/Asia and Latin America regions.

Corporate was a net expense of $13 million and $45 million in the three and nine months ended September 30, 2024 compared to $18 million and $44 million in the three and nine months ended September 30, 2023.

The third quarter year-over-year decrease was primarily due to a decrease in certain professional fees and employee incentive programs.

Depreciation and Amortization

Depreciation and amortization were $86 million and $171 million in the three and six months ended June 30, 2024 compared to $81 million and $161 million in the three and six months ended June 30, 2023.

Depreciation and amortization were $89 million and $260 million in the three and nine months ended September 30, 2024 compared to $83 million and $244 million in the three and nine months ended September 30, 2023.

The year-over-year increase was primarily due to a larger asset base.

Share-based Compensation

We recognized $12 million and $25 million of share-based compensation in the three and six months ended June 30, 2024 compared to $8 million and $17 million in the three and six months ended June 30, 2023.

We recognized $10 million and $35 million of share-based compensation in the three and nine months ended September 30, 2024 compared to $9 million and $26 million in the three and nine months ended September 30, 2023.

The year-over-year increase was primarily due to an increase in equity awards granted.

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and the price of oil and natural gas.

We continue to expect overall 2024 growth to outpace 2023, led by international activity and global offshore activity.

We expect continued improvements in our customer activity levels and generally constructive macroeconomic conditions, all of which are expected to continue to provide a pathway to a multi-year energy demand expansion.

We continue to expect overall 2024 revenue to outpace 2023, led by international activity and global offshore activity.

We expect there to be continued variability in economic conditions globally, driven primarily by geopolitical events.

While the global macroeconomic conditions support continued activity and investments by our customers, there exists a significant risk of activity reduction in certain areas if commodity prices drop significantly.

Alternately, there could be a curtailment of activity altogether if security infrastructure in certain regions is compromised due to the ongoing conflicts in multiple regions.

At the same time, there could also be a significant uptick in activity if there is a positive shift in hydrocarbon fuel demand or a curtailment of supply due to geopolitical events in certain regions.

We anticipate shifts in activity mix and evolution of demand for technology solutions and continue to align our business priorities with market demand trends.

We remain constructive on the mid-to-long-term outlook which provides a pathway to a multi-year energy demand expansion.

We continue to closely monitor macroeconomic and geopolitical conditions, potential supply chain disruptions, inflationary factors, and other labor and logistical constraints that could impact our operations and results.

Liquidity and Capital Resources

At June 30, 2024, we had cash and cash equivalents of $862 million and $58 million in restricted cash, compared to $958 million of cash and cash equivalents and $105 million in restricted cash at December 31, 2023.

At September 30, 2024, we had cash and cash equivalents of $920 million and $58 million in restricted cash, compared to $958 million of cash and cash equivalents and $105 million in restricted cash at December 31, 2023.

The following table summarizes cash flows provided by (used in) each type of business activity in the periods presented:

Six Months Ended June 30,

Nine Months Ended September 30,

(Dollars in millions) 2024

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Operating Activities

Cash provided by operating activities was $281 million for the six months ended June 30, 2024 compared to cash provided by operating activities of $285 million for the six months ended June 30, 2023.

Cash provided by operating activities was $543 million for the nine months ended September 30, 2024 compared to cash provided by operating activities of $457 million for the nine months ended September 30, 2023.

The primary operating sources of cash were from the timing of cash generated by our operations, offset by our operating spend, including payments to suppliers and employees.

Net cash provided by operating activities was also benefited by accounts receivable factoring, as further described in the Accounts Receivable Factoring section below.

The increase in cash provided by operating activities in 2024 over 2023 was partly from revenue growth and its conversion to cash as well as from higher than average collections from our largest customer in Mexico.

Investing Activities

Cash used in investing activities was $115 million for the six months ended June 30, 2024 compared to cash used in investing activities of $122 million for the six months ended June 30, 2023.

The primary investing uses of cash were for capital expenditures of $121 million and $100 million for the six months ended June 30, 2024 and six months ended June 30, 2023, respectively.

Cash used in investing activities also includes the use of the Blue Chip Swap mechanism in Argentina, of which the purchases more than offset the proceeds, resulting in a loss of $10 million and $57 million during the six months ended June 30, 2024 and June 30, 2023 (see “Note 12 – Blue Chip Swap Securities - Argentina”).

Cash used in investing activities was $207 million for the nine months ended September 30, 2024 compared to cash used in investing activities of $158 million for the nine months ended September 30, 2023.

The primary investing uses of cash were for capital expenditures of $199 million and $142 million for the nine months ended September 30, 2024 and the nine months ended September 30, 2023, respectively.

Cash used in investing activities also includes the use of the Blue Chip Swap mechanism in Argentina, of which the purchases more than offset the proceeds, resulting in a loss of $10 million and $57 million during the nine months ended September 30, 2024 and September 30, 2023 (see “Note 12 – Blue Chip Swap Securities - Argentina”), respectively.

The increase in business acquisitions, net of cash acquired in the current period was primarily from our acquisitions completed in the first quarter of 2024 (see “Note 13 – Acquisitions”).

Other investing activities include proceeds from the disposition of assets and proceeds from the sale of investments from our marketable securities in Argentina, offset by investing spend around other intangibles.

Other investing activities include proceeds from the sale of investments from our marketable securities in Argentina and proceeds from the disposition of assets, offset by investing spend around other intangibles.

Financing Activities

Cash used in financing activities was $289 million for the six months ended June 30, 2024 compared to cash used in financing activities of $297 million for the six months ended June 30, 2023.

The primary financing uses of cash were for repayments and repurchases of long-term debt of $259 million and $230 million for the six months ended June 30, 2024 and six months ended June 30, 2023, respectively (see “Note 6 – Borrowings and Other Debt Obligations”).

Cash used in financing activities also includes tax remittances on equity awards vested, which were lower this period compared to the same period in the prior year due to a decrease in the quantity of shares vested.

In addition, the tax remittance of $54 million on equity rewards vested in the prior year reflected the impact on the timing of both the quantity of shares vested and the increase in share price of those awards upon vesting.

Other financing uses of cash include distributions to noncontrolling interests and bond redemption premiums paid.

Cash used in financing activities was $378 million for the nine months ended September 30, 2024 compared to cash used in financing activities of $388 million for the nine months ended September 30, 2023.

The primary financing uses of cash were for repayments and repurchases of long-term debt of $264 million and $306 million for the nine months ended September 30, 2024 and nine months ended September 30, 2023, respectively (see “Note 6 – Borrowings and Other Debt Obligations”), cash dividends and share repurchases.

On July 23, 2024, we announced that our Board declared a cash dividend of $0.25 per share of the Company’s ordinary shares, payable on September 12, 2024 to shareholders of record as of August 13, 2024.

In the third quarter of 2024, dividends paid were $18 million.

Also on July 23, 2024, we announced a $500 million share repurchase program.

In the third quarter of 2024, share repurchases were $50 million.

Other financing uses of cash primarily include distributions to noncontrolling interests and bond redemption premiums paid.

Sources of Liquidity

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See further discussion in our Consolidated Financial Statements included in our Form 10-K for the year ended December 31, 2023 (“2023 Form 10-K”).

The CDS agreement at “Note 11 – Credit Default Swap” was terminated on July 17, 2024 and the remaining notional balance was eliminated (see “Note 14 – Subsequent Events”).

Our cash requirements will also include payments for our shareholder returns program described in “Note 14 – Subsequent Events.”

As of June 30, 2024, the aggregate principal amount of our primary debt outstanding was $1.6 billion of our 2030 Senior Notes.

We expect to pay $138 million in interest payments in 2024 specific to this note, of which we have paid $69 million during the six months ended June 30, 2024.

The credit default swap agreement at “Note 11 – Credit Default Swap” was terminated on July 17, 2024 and the remaining notional balance was extinguished.

Our cash requirements also include payments for our shareholder returns programs described in “Note 8 – Shareholders’ Equity.”

As of September 30, 2024, the aggregate principal amount of our primary debt outstanding was $1.6 billion of our 2030 Senior Notes.

We expect to pay $138 million in interest payments in 2024 specific to this note, of which we have paid $69 million during the nine months ended September 30, 2024.

See “Note 6 – Borrowings and Other Debt Obligations” for additional information.

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Cash and cash equivalents and restricted cash are held by subsidiaries outside of Ireland.

At June 30, 2024 and December 31, 2023, we had approximately $123 million and $92 million, respectively, of our cash and cash equivalents that cannot be immediately repatriated from various countries due to country central bank controls or other regulations.

At September 30, 2024 and December 31, 2023, we had approximately $118 million and $92 million, respectively, of our cash and cash equivalents that cannot be immediately repatriated from various countries due to country central bank controls or other regulations.

As we continue to conduct business in certain countries with cash that cannot be immediately repatriated, we may consider infrequent transactions to safeguard our cash from exposure to the effects of inflation and currency devaluation.

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Ratings Services’ Credit Ratings

Our credit ratings at December 31, 2023 have been maintained through June 30, 2024.

Our credit ratings at December 31, 2023 have been maintained and upgraded through our current filing date as follows:

• Standard and Poor (“S&P) and Fitch Ratings (“Fitch”) upgraded our issuer credit ratings from ‘B+’ to ‘BB-;’ there have been no updates to the S&P and Fitch outlook since December 31, 2023

• There have been no updates to the Moody's Investors Service rating since December 31, 2023

Customer Receivables

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In addition, our customers are primarily in fossil fuel-related industries and broad declines in demand for or pricing of oil or natural gas might impact the collections of our customer receivables.

In addition to the exposure in Mexico as noted in the above “Cash Requirements” section and in “Note 11 – Credit Default Swap”, our net accounts receivables in Mexico were 35% and 27% of our total net accounts receivables, as of June 30, 2024 and December 31, 2023, respectively, of which our largest customer in the country accounted for 31% and 22% of our total net outstanding accounts receivables, respectively.

From time to time, we experience delays in payments from our largest customer in Mexico.

The balances due are not in dispute and we do not expect to have any material write-offs of receivables, however, delays or defaults in customer payments in the future could differ from management’s expectations and negatively impact the future results of the Company.

As of June 30, 2024 and December 31, 2023, our net accounts receivables in the U.S.

was under 10% and was 11% of total net accounts receivables, respectively.

As of September 30, 2024 and December 31, 2023, our net accounts receivables in the U.S.

was 11% of total net accounts receivables for both periods.

Our net accounts receivables in Mexico were 26% and 27% of our total net accounts receivables, as of September 30, 2024 and December 31, 2023, respectively, of which our largest customer in the country accounted for 21% and 22% of our total net outstanding accounts receivables, respectively.

We have experienced delays in payments from our largest customer in Mexico.

The balances due are not in dispute, however, additional or continued delays in customer payments in the future could differ from historical practice and management’s current expectations, and failures to pay or defaults, if any, could negatively impact the future results of the Company.

During the three and nine months ended September 30, 2024 we paid an immaterial amount of fees to third-party financial institutions to facilitate loans between those financial institutions and our largest customer in Mexico, who in turn paid certain of our outstanding receivables.

Pursuant to such arrangements, we received $317 million and $459 million during the three and nine months ended September 30, 2024, respectively.

As of September 30, 2024 we had no obligations under those loans.

Except for the above, no other country accounted for more than 10% of our net accounts receivables balance.

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From time to time, we participate in factoring arrangements to sell accounts receivable to third-party financial institutions for cash proceeds net of discounts and hold-back.

During the three and six months ended June 30, 2024, we sold accounts receivable balances of $43 million and $51 million, and received cash proceeds of $42 million and $50 million, respectively, at the time of factoring.

Of the $43 million in accounts receivable sold during the second quarter of 2024, $39 million was from a new factoring arrangement we entered into during the quarter.

During the three and six months ended June 30, 2023, we sold accounts receivable balances of $63 million and $109 million, and received cash proceeds of $61 million and $103 million, respectively, at the time of factoring.

During the three and nine months ended September 30, 2024, we sold accounts receivable balances of $4 million and $55 million, and received cash proceeds of $4 million and $54 million, respectively, at the time of factoring.

During the three and nine months ended September 30, 2023, we sold accounts receivable balances of $12 million and $121 million, and received cash proceeds of $11 million and $114 million, respectively, at the time of factoring.

The above factoring proceeds were included in Net Cash Provided by Operating Activities in the Condensed Consolidated Statements of Cash Flows.

Our 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.

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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 April 22, 2024, additional lenders joined the Credit Agreement, providing an increase in total commitments from $550 million to $680 million (performance letters of credit increased from $250 million to $309 million and borrowings or

additional performance or financial letters of credit increased from $300 million to $371 million).

On June 6, 2024, an additional lender joined the Credit Agreement, providing an increase in total commitments from $680 million to $720 million (performance letters of credit increased to $327 million and revolving loan borrowings or additional performance or financial letters of credit increased to $393 million).

In addition, we amended the Credit Agreement to allow for future increases in total commitments of up to $1 billion.

As of June 30, 2024, we had zero borrowings outstanding under the Credit Agreement and $389 million of letters of credit outstanding.

The letters of credit consisted of 289 million for performance letters of credit and $48 million for financial letters of credit under the Credit Agreement and $52 million letters of credit under various uncommitted bi-lateral facilities ($44 million of which was cash collateral held and recorded in “Restricted Cash” on the Condensed Consolidated Balance Sheets).

As of September 30, 2024, we had zero borrowings outstanding under the Credit Agreement and $386 million of letters of credit outstanding.

The letters of credit consisted of 277 million for performance letters of credit, $40 million for financial letters of credit under the Credit Agreement and $69 million letters of credit under various uncommitted bi-lateral facilities ($44 million of which was cash collateral held and recorded in “Restricted Cash” on the Condensed Consolidated Balance Sheets).

As of December 31, 2023, we had zero borrowings outstanding under the Credit Agreement and $376 million of letters of credit.

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We utilize surety bonds as part of our customary business practice in certain regions, primarily Latin America.

As of June 30, 2024 and December 31, 2023, we had surety bonds outstanding of $526 million and $594 million, respectively.

As of September 30, 2024 and December 31, 2023, we had surety bonds outstanding of $546 million and $594 million, respectively.

Any of our outstanding letters of credit or surety bonds could be called by the beneficiaries should we breach certain contractual or performance obligations and could reduce our available liquidity if we are unable to mitigate the issue.

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Risk Factors”, sets forth certain risks and uncertainties relating to our forward-looking statements that may cause actual results to be materially different from our present expectations or projections:

• global political, economic and market conditions, political disturbances, war, terrorist attacks, changes in global trade policies, weak local economic conditions and international currency fluctuations (including the Russia Ukraine Conflict);

• general global economic repercussions related to U.S.

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• adverse weather conditions in certain regions of our operations.

Many of these factors are macro-economic in nature and are, therefore, beyond our control.

Many of these factors are macroeconomic in nature and are, therefore, beyond our control.

Should one or more of these risks or uncertainties materialize, affect us in ways or to an extent that we currently do not expect or consider to be significant, or should underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from those described in this report as anticipated, believed, estimated, expected, intended, planned or projected.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis