SEC Filing | Weatherford International

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wfrd-20220630


			UNITED STATES
			SECURITIES AND EXCHANGE COMMISSION
			WASHINGTON, D.C. 20549

(Mark One)

Form

10-Q

☑

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

June 30, 2022

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________________________________to __________________________________

Commission file number

001-36504

Weatherford International plc

(Exact Name of Registrant as Specified in Its Charter)

Ireland

98-0606750

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

2000 St. James Place

Houston

Texas

77056

(Address of Principal Executive Offices)

(Zip Code)

Registrant’s Telephone Number, Including Area Code: 713.836.4000

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Ordinary shares, $0.001 par value per share	WFRD	The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☑

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☑ No ☐

As of July 21, 2022, there were 70,545,415 Weatherford ordinary shares, $0.001 par value per share, outstanding.

Weatherford International public limited company

Form 10-Q for the Second Quarter and Six Months Ended June 30, 2022


TABLE OF CONTENTS

						PAGE
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.						2
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.						16
Item 3. Quantitative and Qualitative Disclosures About Market Risk.						26
Item 4. Controls and Procedures.						27

PART II – OTHER INFORMATION
Item 1. Legal Proceedings.						27
Item 1A. Risk Factors.						27
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.						27
Item 3. Defaults Upon Senior Securities.						27
Item 4. Mine Safety Disclosures.						27
Item 5. Other Information.						27
Item 6. Exhibits.						28
SIGNATURES						29

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(Dollars and shares in millions, except per share amounts)	2022		2021		2022		2021
Revenues:
Services	$	656	$	588	$	1,249	$	1,111
Products	408		315		753		624
Total Revenues	1,064		903		2,002		1,735
Costs and Expenses:
Cost of Services	418		392		803		748
Cost of Products	338		285		635		565
Research and Development	22		21		43		42
Selling, General and Administrative	196		188		374		376
Restructuring Charges	—		—		20		—
Other Charges (Credits)	(14)		(8)		5		(8)
Total Costs and Expenses	960		878		1,880		1,723
Operating Income	104		25		122		12
Interest Expense, Net	(48)		(72)		(96)		(142)
Other Expense, Net	(32)		(11)		(48)		(15)
Income (Loss) Before Income Taxes	24		(58)		(22)		(145)
Income Tax Provision	(12)		(15)		(40)		(38)
Net Income (Loss)	12		(73)		(62)		(183)
Net Income Attributable to Noncontrolling Interests	6		5		12		11
Net Income (Loss) Attributable to Weatherford	$	6	$	(78)	$	(74)	$	(194)

Basic and Diluted Income (Loss) per Share	$	0.08	$	(1.11)	$	(1.04)	$	(2.77)
Basic Weighted Average Shares Outstanding	71		70		71		70


Diluted Weighted Average Shares Outstanding	73		70		71		70

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(Dollars in millions)	2022		2021		2022		2021
Net Income (Loss)	$	12	$	(73)	$	(62)	$	(183)
Foreign Currency Translation Adjustments	59		15		59		11


Comprehensive Income (Loss)	71		(58)		(3)		(172)
Comprehensive Income Attributable to Noncontrolling Interests	6		5		12		11
Comprehensive Income (Loss) Attributable to Weatherford	$	65	$	(63)	$	(15)	$	(183)

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS



(Dollars and shares in millions, except par value)	June 30, 2022		December 31, 2021
	(Unaudited)
Assets:
Cash and Cash Equivalents	$	879	$	951
Restricted Cash	211		162
Accounts Receivable, Net of Allowance for Credit Losses of $30 at June 30, 2022 and $31 at December 31, 2021	930		825
Inventories, Net	716		670
Other Current Assets	274		303
Total Current Assets	3,010		2,911
Property, Plant and Equipment, Net of Accumulated Depreciation of $718 at June 30, 2022 and $623 at December 31, 2021	939		996
Intangible Assets, Net of Accumulated Amortization of $403 at June 30, 2022 and $328 at December 31, 2021	579		657
Operating Lease Right-of-Use Assets	115		113
Other Non-Current Assets	92		97
Total Assets	$	4,735	$	4,774

Liabilities:
Current Portion of Long-term Debt	$	64	$	12
Accounts Payable	448		380
Accrued Salaries and Benefits	291		343
Income Taxes Payable	142		140
Current Portion of Operating Lease Liabilities	53		59
Other Current Liabilities	385		398
Total Current Liabilities	1,383		1,332
Long-term Debt	2,366		2,416
Operating Lease Liabilities	121		128
Non-current Taxes Payable	239		264
Other Non-Current Liabilities	135		138
Total Liabilities	$	4,244	$	4,278

Shareholders’ Equity:
Ordinary Shares - Par Value $0.001; Authorized 1,356 shares, Issued and Outstanding 70 shares at June 30, 2022 and December 31, 2021	$	—	$	—
Capital in Excess of Par Value	2,913		2,904
Retained Deficit	(2,471)		(2,397)
Accumulated Other Comprehensive Income (Loss)	24		(35)
Weatherford Shareholders’ Equity	466		472
Noncontrolling Interests	25		24
Total Shareholders’ Equity	491		496
Total Liabilities and Shareholders’ Equity	$	4,735	$	4,774

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	Six Months Ended June 30,
(Dollars in millions)	2022		2021
Cash Flows From Operating Activities:
Net Loss	$	(62)	$	(183)
Adjustments to Reconcile Net Loss to Net Cash (Used in) Provided by Operating Activities:
Depreciation and Amortization	177		225



Asset Write-downs and Other Charges	6		—
Inventory Charges	24		39
Gain on Disposition of Assets	(14)		(13)
Deferred Income Tax Provision	6		6
Share-Based Compensation	13		9
Changes in Operating Assets and Liabilities, Net:
Accounts Receivable	(86)		41
Inventories	(71)		15
Accounts Payable	62		16
Other Assets and Liabilities, Net	(59)		(35)
Net Cash (Used in) Provided by Operating Activities	(4)		120
Cash Flows From Investing Activities:
Capital Expenditures for Property, Plant and Equipment	(44)		(24)
Proceeds from Disposition of Assets	43		22
Other Investing Activities	8		—
Net Cash Provided by (Used in) Investing Activities	7		(2)
Cash Flows From Financing Activities:




Repayments of Long-term Debt	(7)		(5)
Repayments of Short-term Debt, Net	—		(4)





Other Financing Activities	(18)		(6)
Net Cash Used in Financing Activities	(25)		(15)
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash	(1)		(1)
Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash	(23)		102
Cash, Cash Equivalents and Restricted Cash at Beginning of Period	1,113		1,285
Cash, Cash Equivalents and Restricted Cash at End of Period	$	1,090	$	1,387
Supplemental Cash Flow Information:
Interest Paid	$	117	$	141
Income Taxes Paid, Net of Refunds	$	42	$	32

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1 – Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements of Weatherford International plc (the “Company,” “Weatherford,” “we,” “us,” or “our”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, certain information and disclosures normally included in our annual consolidated financial statements have been condensed or omitted. Therefore, these unaudited Condensed Consolidated Financial Statements should be read in conjunction with our audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2021 (“2021 Annual Report”).

The preparation of the Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenue and expenses during the reporting period. Ultimate results could differ from our estimates.

In the opinion of management, the Condensed Consolidated Financial Statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary by management to fairly state the results of operations, financial position and cash flows of Weatherford and its subsidiaries for the periods presented and are not necessarily indicative of the results that may be expected for a full year. Our financial statements have been prepared on a consolidated basis. Under this basis, our financial statements consolidate all wholly owned subsidiaries and controlled joint ventures. All intercompany accounts and transactions have been eliminated.

Summary of Significant Accounting Policies

Please refer to “Note 1 – Summary of Significant Accounting Policies” of our Consolidated Financial Statements from our 2021 Annual Report for the discussion on our significant accounting policies. Certain reclassifications have been made to the financial statements and accompanying footnotes for the three and six months ended June 30, 2021 to conform to the presentation for the three and six months ended June 30, 2022, including the change in reportable segments made during the fourth quarter of 2021.

New Accounting Standards

All new accounting pronouncements that have been issued but not yet effective are currently being evaluated and at this time are not expected to have a material impact on our financial position or results of operations.

2 – Segment Information

Financial information by segment is summarized below. The accounting policies of the segments are the same as those described in the summary of significant accounting policies as presented in our 2021 Annual Report. During the fourth quarter of 2021, our chief operating decision maker changed the information regularly reviewed to be aligned with how we offer our services and technologies in relation to the life cycle of a well and we have realigned our reportable segments to reflect the change. All of our segments are enabled by a full suite of digital, monitoring, optimization and artificial intelligence solutions providing services 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. Previously we had two geographic based reportable segments, Western Hemisphere and Eastern Hemisphere.

Our primary measure of segment profitability is segment adjusted EBITDA, which is based on segment earnings before interest, taxes, depreciation, amortization, share-based compensation expense and other adjustments. Research and development expenses are included in segment adjusted EBITDA. Corporate and other includes business activities related to all other segments (profit and loss), corporate and other expenses (overhead support and centrally managed or shared facilities costs) that do not individually meet the criteria for segment reporting.

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	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2022		2021		2022		2021
Revenues:
Drilling and Evaluation	$	317	$	265	$	609	$	501
Well Construction and Completions	383		337		727		660
Production and Intervention	345		278		631		537
Segment Revenues	1,045		880		1,967		1,698
All Other	19		23		35		37
Total Revenues	$	1,064	$	903	$	2,002	$	1,735

Segment Adjusted EBITDA:
Drilling and Evaluation	$	69	$	46	$	128	$	75
Well Construction and Completions	67		55		134		105
Production and Intervention	68		46		107		87
Segment Adjusted EBITDA	$	204	$	147	$	369	$	267
Corporate and Other	(18)		(11)		(32)		(29)
Depreciation and Amortization	(90)		(114)		(177)		(225)
Share-based Compensation Expense	(6)		(5)		(13)		(9)



































Other Adjustments (a)	14		8		(25)		8










Operating Income	$	104	$	25	$	122	$	12

(a)Other adjustments in six months ended June 30, 2022 primarily include a net credit from the gain on asset sales related to our fulfillment initiatives and collections of previously impaired receivables in the three months ended June 30, 2022 offset by net charges in the three months ended March 31, 2022 that include a $20 million restructuring charge and a $17 million charge related to Ukraine. See “Note 4 – Restructuring Charges” for additional information on restructuring around our fulfillment initiatives.

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3 – Revenues

Disaggregated Revenue

Revenues are recognized when control of the promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to receive, in exchange for those goods or services. The majority of our revenue is derived from short term contracts. Our products and services are generally sold based upon purchase orders, contracts or other legally enforceable arrangements with our customers that include fixed or determinable prices but do not generally include right of return provisions or other significant post-delivery obligations.

We lease drilling tools, artificial lift pumping equipment and other unmanned equipment to customers as operating leases. These equipment rental revenues are generally provided based on call-out work orders that include fixed per unit prices and are derived from short-term contracts. Equipment revenues recognized under ASU No. 2016-02, Leases (Topic 842) were $35 million and $66 million in the three and six months ended June 30, 2022, respectively, and $35 million and $63 million for the three and six months ended June 30, 2021, respectively.

The following table disaggregates our revenues from contracts with customers by geographic region and includes equipment rental revenues. North America in the table below consists of the U.S. and Canada.


	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2022		2021		2022		2021








Revenues by Geographic Areas:
Middle East/North Africa/Asia	$	350	$	289	$	660	$	556
North America	268		220		506		434
Latin America	265		205		492		381
Europe/Sub-Sahara Africa/Russia	181		189		344		364

Total Revenues	$	1,064	$	903	$	2,002	$	1,735

Contract Balances

The timing of our revenue recognition, billings and cash collections results in the recording of billed and unbilled accounts receivable, contract assets, customer advances and deposits (contract liabilities classified as deferred revenues). Receivables with customers are included in “Accounts Receivable, Net,” short-term contract assets are included in “Other Current Assets,” long-term contract assets are included in “Other Non-Current Assets” and contract liabilities are included in “Other Current Liabilities” on our Condensed Consolidated Balance Sheets. The following table summarizes these balances as of June 30, 2022 and December 31, 2021:


(Dollars in millions)	June 30, 2022		December 31, 2021
Total Accounts Receivables	$	930	$	825
Receivables for Product and Services in Accounts Receivable, Net	$	900	$	795
Receivables for Equipment Rentals in Account Receivable, Net	$	30	$	30

Short-Term Contract Assets in Other Current Assets	$	41	$	47
Long-term Contract Assets in Other Non-Current Assets	$	18	$	14
Contract Liabilities in Other Current Liabilities (a)	$	22	$	26

(a)Revenues recognized during the six months ended June 30, 2022 and 2021 that were included in the contract liabilities balance at the beginning of each year were $18 million and $25 million, respectively.

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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 in ASU 2014-09, Revenues from Contracts with Customers (Topic 606). A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. In the following table, estimated revenue for contracts with original performance obligations greater than twelve months are expected to be recognized in the future related to performance obligations that are either unsatisfied or partially unsatisfied as of June 30, 2022.


(Dollars in millions)	2022		2023		2024		2025		Thereafter		Total
Service Revenue	$	35	$	63	$	65	$	52	$	22	$	237

4 – Restructuring Charges

We had nil and $20 million in restructuring charges for the three and six months ended June 30, 2022, respectively, presented as “Restructuring Charges” on the accompanying Condensed Consolidated Statements of Operations. The charges were primarily related to the launch of a multi-year footprint consolidation and workforce efficiency initiative aimed at improving fulfillment operations and included $14 million in severance and $6 million in asset retirement obligations. No restructuring charges were recognized in the three and six months ended June 30, 2021.

The following table presents total restructuring charges by segment and All Other in the three and six months ended June 30, 2022 and 2021:










	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2022		2021		2022		2021
Drilling and Evaluation	$	—	$	—	$	5	$	—
Well Construction and Completions	—		—		7		—
Production and Intervention	—		—		5		—
All Other	—		—		3		—
Total Restructuring Charges	$	—	$	—	$	20	$	—

The following table presents total restructuring reserve activity in the six months ended June 30, 2022:


(Dollars in millions)	December 31, 2021		Charges		Cash Payments		(Credits)/Other		June 30, 2022
Restructuring Reserve	$	17	$	20	$	(10)	$	—	$	27

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5 – Inventories, Net

Inventories, net of reserves of $139 million and $159 million as of June 30, 2022 and December 31, 2021, respectively, are presented by category in the table below:


(Dollars in millions)	June 30, 2022		December 31, 2021
Finished Goods	$	634	$	595
Work in Process and Raw Materials, Components and Supplies	82		75


Inventories, Net	$	716	$	670

In the three and six months ended June 30, 2022 and 2021, we recognized inventory charges, including excess and obsolete inventory charges, in the following captions on our Condensed Consolidated Statements of Operations:


	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2022		2021		2022		2021
Inventory Charges in “Cost of Products”	$	9	$	16	$	20	$	32
Inventory Charges in “Other Charges (Credits)”	—		6		4		7
Total Inventory Charges	$	9	$	22	$	24	$	39

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6 – Intangibles, Net

The components of intangible assets, net were as follows:


(Dollars in millions)	June 30, 2022		December 31, 2021
Developed and Acquired Technology, Net of Accumulated Amortization of $302 at June 30, 2022 and $247 at December 31, 2021	$	285	$	343
Trade Names, Net of Accumulated Amortization of $101 at June 30, 2022 and $81 at December 31, 2021	294		314
Intangible Assets, Net of Accumulated Amortization of $403 at June 30, 2022 and $328 at December 31, 2021	$	579	$	657

Amortization expense was $39 million and $78 million for both the three and six months ended June 30, 2022 and June 30, 2021, respectively, and is reported in “Selling, General and Administrative” on our Condensed Consolidated Statements of Operations.

7 – Borrowings and Other Debt Obligations


(Dollars in millions)	June 30, 2022		December 31, 2021




Current Portion of Finance Leases	$	14	$	12
Current Portion of Exit Notes	50		—

Current Portion of Long-term Debt	$	64	$	12

11.00% Exit Notes due 2024	$	250	$	300
6.50% Senior Secured Notes due 2028	489		488
8.625% Senior Notes due 2030	1,585		1,584
Long-term Portion Finance Leases	42		44
Long-term Debt	$	2,366	$	2,416

Our Exit Notes, 2028 Senior Secured Notes and 2030 Senior Notes (described below) were issued by Weatherford Bermuda and guaranteed by Weatherford International plc and Weatherford Delaware and other subsidiary guarantors party thereto.

Exit Notes

We have an outstanding aggregate principal amount of $300 million due in 2024 on our 11.00% senior unsecured notes (“Exit Notes”) with interest payable semiannually on June 1 and December 1. At June 30, 2022, the carrying value of $300 million represents the remaining unpaid principal. On July 11, 2022, we issued a notice of election to redeem $50 million in principal plus related unpaid interest by August 10, 2022 of our Exit Notes.

2028 Senior Secured Notes

On September 30, 2021, we issued 6.50% 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 6.50% per annum and is payable semiannually on September 15 and March 15 of each year, commencing on March 15, 2022. Proceeds from this debt issuance were used to fully repay a senior secured note with an aggregate principal amount of $500 million with a stated interest rate of 8.75% per annum due 2024.

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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, commencing on June 1, 2022. The proceeds from this debt issuance were used to redeem $1.6 billion of the above Exit Notes.

LC Agreement

We have a senior secured letter of credit agreement (the “LC Agreement”) in an aggregate amount of $215 million maturing on May 29, 2024, which is used by the Company and certain of its subsidiaries for the issuance of bid and performance letters of credit.

At June 30, 2022, we had approximately $173 million in outstanding letters of credit under the LC Agreement and availability of $42 million.

As of June 30, 2022, we had $378 million of letters of credit outstanding, consisting of the $173 million under the LC Agreement and another $205 million under various uncommitted bi-lateral facilities (of which there was $205 million in cash collateral held and recorded in “Restricted Cash” on the Condensed Consolidated Balance Sheets). Our letters of credit under various uncommitted bi-lateral facilities increased “Restricted Cash” since December 31, 2021 due to a requirement from a new multi-year contract.

Accrued Interest

As of June 30, 2022 and December 31, 2021, we had accrued interest of approximately $24 million and $35 million, respectively in “Other Current Liabilities” primarily related to the Exit Notes, 2028 Senior Secured Notes and 2030 Senior Notes.

Fair Value of Short and Long-term Borrowings

The carrying value of our short-term borrowings approximates their fair value due to their short maturities. These short-term borrowings are classified as Level 2 in the fair value hierarchy.

The fair value of our long-term debt fluctuates with changes in applicable interest rates among other factors. Fair value will exceed carrying value when the current market interest rate is lower than the interest rate at which the debt was originally issued and will be less than the carrying value when the market rate is greater than the interest rate at which the debt was originally issued. The fair value of our long-term debt is classified as Level 2 in the fair value hierarchy and is established based on observable inputs in less active markets. The table below presents the fair value and carrying value of our long-term debt (including the current portion of long-term debt and excluding finance leases).


	June 30, 2022				December 31, 2021
(Dollars in millions)	Carrying Value		Fair Value		Carrying Value		Fair Value
11.00% Exit Notes due 2024	$	300	$	302	$	300	$	311
6.50% Senior Secured Notes due 2028	489		450		488		528
8.625% Senior Notes due 2030	1,585		1,338		1,584		1,660
Current and Long-Term Debt (excluding Finance Leases)	$	2,374	$	2,090	$	2,372	$	2,499

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8 – Disputes, Litigation and Legal Contingencies

We are subject to lawsuits and claims arising out of the nature of our business. We have certain claims, disputes and pending litigation for which we do not believe a negative outcome is probable or for which we can only estimate a range of liability. It is possible, however, that an unexpected judgment could be rendered against us, or we could decide to resolve a case or cases, that would result in a liability that could be uninsured and beyond the amounts we currently have reserved and in some cases those losses could be material. If one or more negative outcomes were to occur relative to these cases, the aggregate impact to our financial condition could be material.

Accrued litigation and settlements recorded in “Other Current Liabilities” on the accompanying Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021 were $41 million and $40 million, respectively.

GAMCO Shareholder Litigation

On September 6, 2019, GAMCO Asset Management, Inc. (“GAMCO”), purportedly on behalf of itself and other similarly situated shareholders, filed a lawsuit asserting violations of the federal securities laws against certain then-current and former officers and directors of the Company. GAMCO alleges violations of Sections 10(b) and 20(b) of the Securities Exchange Act of 1934, and violations of Sections 11 and 15 of the Securities Act of 1933, as amended (the “Securities Act”) based on allegations that the Company and certain of its officers made false and/or misleading statements, and alleged non-disclosure of material facts, regarding our business, operations, prospects and performance. GAMCO seeks damages on behalf of purchasers of the Company’s ordinary shares from October 26, 2016 through May 10, 2019. GAMCO’s lawsuit was filed in the United States District Court for the Southern District of Texas, Houston Division, and it is captioned GAMCO Asset Management, Inc. v. McCollum, et al., Case No. 4:19-cv-03363. The District Court Judge appointed Utah Retirement Systems (“URS”) as Lead Plaintiff, and on March 16, 2020, URS filed its Amended Complaint. URS added the Company as a defendant but dropped the claims against non-officer board members and all the claims under the Securities Act. The defendants filed their motion to dismiss on May 18, 2020, and the Court granted the motion on May 14, 2021. URS appealed the Court’s Opinion on Dismissal to the Court of Appeals for the Fifth Circuit, and the parties are continuing to await a decision. We cannot reliably predict the outcome of the claims, including the amount of any possible loss.

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9 – Shareholders’ Equity

The following summarizes our shareholders’ equity activity for the three and six months ended June 30, 2022 and 2021:


(Dollars in millions)	Capital in Excess of Par Value		Retained Deficit		Accumulated Other Comprehensive Income (Loss)		Non-controlling Interests “NCI”		Total Shareholders’ Equity
Balance at December 31, 2021	$	2,904	$	(2,397)	$	(35)	$	24	$	496
Net Income (Loss)	—		(80)		—		6		(74)
Equity Awards, Granted, Vested and Exercised	4		—		—		—		4

Balance at March 31, 2022	$	2,908	$	(2,477)	$	(35)	$	30	$	426
Net Income	—		6		—		6		12
Other Comprehensive Income	—		—		59		—		59
Dividends to NCI	—		—		—		(11)		(11)
Equity Awards Granted, Vested and Exercised	5		—		—		—		5

Balance at June 30, 2022	$	2,913	$	(2,471)	$	24	$	25	$	491







Balance at December 31, 2020	$	2,897	$	(1,947)	$	(43)	$	30	$	937
Net Income (Loss)	—		(116)		—		6		(110)
Dividends to NCI	—		—		—		(2)		(2)
Other Comprehensive Loss	—		—		(4)		—		(4)


Balance at March 31, 2021	$	2,897	$	(2,063)	$	(47)	$	34	$	821
Net Income (Loss)	—		(78)		—		5		(73)
Other Comprehensive Income	—		—		15		—		15
Dividends to NCI	—		—		—		(4)		(4)
Equity Awards Granted, Vested and Exercised	2		—		—		—		2
Other	—		—		—		(2)		(2)
Balance at June 30, 2021	$	2,899	$	(2,141)	$	(32)	$	33	$	759

The following table presents the changes in our accumulated other comprehensive income (loss) by component for the six months ended June 30, 2022 and 2021:


(Dollars in millions)	Currency Translation Adjustment		Defined Benefit Pension		Total
Balance at December 31, 2021	$	(36)	$	1	$	(35)

Other Comprehensive Income	59		—		59



Balance at June 30, 2022	$	23	$	1	$	24

Balance at December 31, 2020	$	(31)	$	(12)	$	(43)

Other Comprehensive Income	11		—		11



Balance at June 30, 2021	$	(20)	$	(12)	$	(32)

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10 – Income (Loss) per Share

Basic income (loss) per share for all periods presented equals net income (loss) divided by our weighted average shares outstanding during the period. Diluted income (loss) per share is computed by dividing net income (loss) by our weighted average shares outstanding during the period including potential dilutive ordinary shares. Antidilutive shares represent potentially dilutive securities which are excluded from the computation of diluted income or loss per share as their impact was antidilutive. These include potential ordinary shares for restricted share units, performance share units, phantom restricted share units, and outstanding warrants. Our basic and diluted weighted average shares outstanding for periods presented with net loss are equivalent as the impact of the inclusion of potential dilutive securities are antidilutive.

A reconciliation of the number of shares used for the basic and diluted income (loss) per share calculation was as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars and shares in millions, except per share amounts)	2022		2021		2022		2021
Net Income (Loss) Attributable to Weatherford	$	6	$	(78)	$	(74)	$	(194)
Basic Weighted Average Shares Outstanding	71		70		71		70
Dilutive Effect of Awards Granted in Stock Incentive Plans	2		—		—		—
Diluted Weighted Average Shares Outstanding	73		70		71		70

Antidilutive Shares	8		10		11		10
Basic and Diluted Income (Loss) Per Share Attributable to Weatherford	$	0.08	$	(1.11)	$	(1.04)	$	(2.77)

11 – Income Taxes

We determine our quarterly tax provision using the year-to-date effective tax rate because the estimated annual approach is not reliable given that small changes in estimated ordinary annual income result in significant changes in our estimated annual effective tax rate. The year-to-date effective tax rate treats the year-to-date period as if it was the annual period and determines the income tax expense or benefit on that basis.

In the three and six months ended June 30, 2022, we recognized tax expense of $12 million and $40 million, respectively, on an income before income taxes of $24 million and loss before taxes of $22 million, respectively, compared to the three and six months ended June 30, 2021 where we recognized tax expense of $15 million and $38 million, respectively, on a loss before income taxes of $58 million and $145 million, respectively. The expense in the three and six months ended June 30, 2022 included a $27 million recognition of a benefit from previously uncertain tax positions. Our income tax provisions are primarily driven by income in certain jurisdictions, deemed profit countries and withholding taxes on intercompany and third-party transactions that do not directly correlate to ordinary income or loss and other adjustments. Impairments and other charges recognized may not result in significant tax benefit due to our inability to forecast realization of the tax benefit of such losses.

We routinely undergo tax examination in various jurisdictions. We cannot predict the timing or outcome regarding resolution of these tax examinations or if they will have a material impact on our financial statements. As of June 30, 2022, we anticipate that it is reasonably possible that our uncertain tax positions of $239 million 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.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

As used in this item, “Weatherford”, “the Company,” “we,” “us” and “our” refer to Weatherford International plc, a public limited company organized under the laws of Ireland, and its subsidiaries on a consolidated basis. The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements and Notes thereto included in “Item 1. Financial Statements.” Our discussion includes various forward-looking statements about our markets, the demand for our products and services and our future results. These statements include assumptions, certain risks and uncertainties. For information about these assumptions, risks and uncertainties, refer to the section “Forward-Looking Statements” and the section “PART II - Other Information - Item 1A. Risk Factors.”

Business

Weatherford delivers innovative energy services that integrate proven technologies with advanced digitalization to create sustainable offerings for maximized value and return on investment. We provide equipment and services used in the drilling, evaluation, construction, completion, production, intervention and responsible abandonment of wells across the broad spectrum of energy sources.

We conduct operations in approximately 75 countries, answering the challenges of the energy industry with 350 operating locations including manufacturing, research and development, service, and training facilities.

Our principal business is to provide equipment and services to the oil and natural gas exploration and production industry as well as new energy platforms across our three product line segments: (1) Drilling and Evaluation (2) Well Construction and Completions, and (3) Production and Intervention. All of our segments are enabled by a full suite of digital, monitoring, optimization and artificial intelligence solutions providing services throughout the well life cycle, including responsible abandonment.

Drilling and Evaluation (“DRE”) offers a suite of services including managed pressure drilling, drilling services, wireline and drilling fluids. DRE offers services ranging 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 production optimization technologies through the Company’s ability to design and deliver a complete production ecosystem to boost productivity and responsible abandonment for our customers. The primary offerings are intervention services & drilling tools, artificial lift, production automation & software, sub-sea intervention and pressure pumping services. PRI utilizes 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.

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Industry Trends

The level of spending in the energy industry is heavily influenced by the current and expected future prices of oil and natural gas, but is also impacted by environmental, social and governance (“ESG”) initiatives, and ongoing supply chain shortages as well as geopolitical events like the ongoing military conflict between Russia and Ukraine (“Russia Ukraine Conflict”). These events, in addition to the reopening of the global economy around the relaxing of public restrictions related to the COVID-19 pandemic, have caused commodity prices to increase year-over-year.

The industry is also impacted by sanctions related to the Russia Ukraine Conflict. Most notably, several countries including the United States, the European Union and the United Kingdom, have imposed broad sanctions against Russia, certain Russian individuals and certain activities involving Russia or Russian individuals. These factors may result in an increase or decrease in demand for our products and services.

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


	Three Months Ended		Six Months Ended
	6/30/2022	6/30/2021		6/30/2022	6/30/2021
Oil price - WTI (1)	$108.72	$66.09		$101.59	$61.94
Oil price - Brent (1)	$113.54	$68.83		$106.92	$64.83
Natural gas price - Henry Hub (2)	$7.48	$2.94		$6.07	$3.25
(1) Oil price measured in dollars per barrel (rounded to the nearest $0.01)
(2) Natural gas price measured in dollars per million British thermal units (Btu), or MMBtu (rounded to the nearest $0.01)

Rig count is an indicator of the level of spending for the exploration and production of oil and natural gas reserves and the increase year-over-year is due to similar reasons described above. The table below shows historical average rig counts based on the weekly Baker Hughes Company rig count information.


	Three Months Ended		Six Months Ended
		6/30/2022		6/30/2021	6/30/2022	6/30/2021
North America		827		522	829	529
International		816		734	819	716
Worldwide		1,643		1,256	1,648	1,245

Consolidated Statements of Operations - Operating Income Summary

Revenues of $1.1 billion and $2.0 billion in the three and six months ended June 30, 2022, increased 18% and 15%, compared to the three and six months ended June 30, 2021, respectively. The year-over-year improvement was from an increased demand across all segments.

Cost of products and services of $756 million and $1.4 billion in the three and six months ended June 30, 2022, increased $79 million, or 12%, and $125 million, or 10%, compared to the three and six months ended June 30, 2021, respectively, primarily reflecting increased overall demand, impacts from supply chain disruptions and inflation. Our cost of products and services as a percentage of revenues was 71% and 72% in the three and six months ended June 30, 2022, an improvement compared to 75% and 76% in the three and six months ended June 30, 2021, reflecting increasing demand on a more efficient cost structure.

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Selling, general, administrative and research and development costs of $218 million and $417 million in the three and six months ended June 30, 2022, increased $9 million, or 4%, and decreased $1 million, compared to the three and six months ended June 30, 2021, primarily reflecting cost initiative efforts in managing the rate of growth on a percentage of revenue growth. These costs as a percentage of revenues were 21% in both the three and six months ended June 30, 2022, an improvement compared to 23% and 24% in the three and six months ended June 30, 2021, also reflecting our focus on simplification.

Restructuring charges include nil and $20 million in the three and six months ended June 30, 2022, see “Note 4 – Restructuring Charges” for additional information.

Other charges (credits) in the three and six months ended June 30, 2022 was a credit of $14 million and a charge of $5 million, respectively. The net credit in the three months ended June 30, 2022 was primarily from the gain on asset sales related to our fulfillment initiatives and collections of previously impaired receivables offset by a net charge in the three months ended March 31, 2022 that includes a $17 million charge related to Ukraine, resulting in a net charge in the six months ended June 30, 2022.

Operating income of $104 million and $122 million in the three and six months ended June 30, 2022 improved $79 million and $110 million, compared to the three and six months ended June 30, 2021, respectively, due to the above-mentioned improvements.

Consolidated Statements of Operations - Non-Operating Expenses Summary

Interest Expense, Net

Interest expense, net was $48 million and $96 million in the three and six months ended June 30, 2022, respectively, and primarily represented interest on our outstanding long-term debt (see “Note 7 – Borrowings and Other Debt Obligations” to our Condensed Consolidated Financial Statements for additional details). Interest expense, net was $72 million and $142 million in the three and six months ended June 30, 2021, respectively. The year-over-year decrease was due to partial repayments of principal and refinancing initiatives in the second half of 2021 which reduced our interest rates.

Other Expense, Net

Other expense, net was $32 million and $48 million in the three and six months ended June 30, 2022, compared to $11 million and $15 million in the three and six months ended June 30, 2021, respectively. Other expense, net is comprised of letter of credit fees, other financing charges, and foreign exchange losses. The year-over-year increase was primarily due to foreign exchange losses, changes in fair value and settlements of certain foreign currency forward contracts. 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 hedge decisions. At June 30, 2022 and December 31, 2021, we had outstanding foreign currency forward contracts with notional amounts aggregating to $43 million and $349 million, respectively.

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 residents for income tax purposes. The relationship between our pre-tax income or loss from continuing operations and our income tax benefit or provision 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, the impacts of tax planning activities and the resolution of tax audits. Our effective rate differs from the Irish statutory tax rate as the majority of our operations are taxed in jurisdictions with different tax rates. In addition, we are generally unable to recognize tax benefit on our losses. Please see “Note 11 – Income Taxes” to our Condensed Consolidated Financial Statements for additional details.

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Segment Results of Operations

Financial information by segment is summarized below.


					Favorable
					(Unfavorable)
	Three Months Ended				$		% or bps
(Dollars in millions)	6/30/2022		6/30/2021		Change
Revenues:
Drilling and Evaluation	$	317	$	265	$	52	20	%
Well Construction and Completions	383		337		46		14	%
Production and Intervention	345		278		67		24	%
Segment Revenues	1,045		880		165		19	%
All Other	19		23		(4)		(17)	%
Total Revenues	$	1,064	$	903	$	161	18	%

Segment Adjusted EBITDA:
Drilling and Evaluation	$	69	$	46	$