| UNITED STATES | |||||
| SECURITIES AND EXCHANGE COMMISSION | |||||
| Washington, D.C. 20549 | |||||
| Form | ||||||||||||||
| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||||||
| For the fiscal year ended | |||||||||||
or | |||||||||||
| 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 | |||||||||||
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||
Registrant’s telephone number, including area code: 713 .836.4000
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 | ||||||
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑
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 ☑ 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ 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.
| ☑ | 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑ Yes ☐ No
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑
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 ☐
The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, 2023 was approximately $3.6 billion based upon the closing price on the Nasdaq Global Select Market as of such date. The registrant had 72,316,426 ordinary shares outstanding as of February 1, 2024.
DOCUMENTS INCORPORATED BY REFERENCE
Certain information required to be furnished pursuant to Part III of this Form 10-K will be set forth in, and will be incorporated by reference from, Weatherford’s definitive proxy statement for the 2024 Annual General Meeting of Shareholders to be filed by
Weatherford with the Securities and Exchange Commission (“SEC”) pursuant to Regulation 14A within 120 days after the registrant’s fiscal year ended December 31, 2023 .
Weatherford International plc
Form 10-K for the Year Ended December 31, 2023
Table of Contents
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Weatherford International plc – 2023 Form 10-K | 1
Table of Contents Item 1 | Business
PART I
Item 1. Business.
Weatherford International plc, an Irish public limited company, together with its subsidiaries (“Weatherford,” the “Company,” “we,” “us” and “our”), is a leading global energy services company providing equipment and services used in the drilling, evaluation, well construction, completion, production, intervention, and responsible abandonment of wells in the oil and natural gas exploration and production industry as well as new energy platforms.
We conduct business in approximately 75 countries, answering the challenges of the energy industry with 335 operating locations including manufacturing, research and development, service, and training facilities. Our operational performance is reviewed and managed across the life cycle of the wellbore, and we report in three segments (1) Drilling and Evaluation, (2) Well Construction and Completions, and (3) Production and Intervention.
On June 1, 2021, NASDAQ approved our application for the listing of our ordinary shares. In connection with the listing, we became subject to the reporting requirements of the Securities Exchange Act of 1934 (as amended, the “Exchange Act”). Our ordinary shares began trading on the Nasdaq Global Select Market on June 2, 2021, under the ticker symbol “WFRD”.
Our principal executive offices are located at 2000 St. James Place, Houston, Texas 77056, and our telephone number at that location is +1.713.836.4000. Our internet address is www.weatherford.com. General information about us, including our corporate governance policies, code of business conduct and charters for the committees of our Board of Directors, can be found on our website, and such information provided on our website, is not incorporated by reference into this Form 10-K. On our website we make available, free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and amendments to those reports filed or furnished as soon as reasonably practicable after we electronically file or furnish them to the Securities and Exchange Commission (“SEC”). The SEC maintains a website that contains our reports, proxy and information statements, and our other SEC filings. The address of that site is www.sec.gov.
Strategy
Our goal is to create and deliver value for our shareholders throughout industry cycles by creating sustainable profitability that enables cash flow generation from our products and services regardless of market conditions. We accomplish this goal by disciplined use of capital, rigor around safety and operations, and a strong customer focus.
Our customers’ objectives are continually evolving and are currently focused on disciplined capital and operational expenditures, generating investor and shareholder returns, reducing emissions, participating in the energy transition, and enhancing safety. Weatherford has aligned our technology development and operations around these objectives and expanded our role as a market leading provider of solutions that assist our customers in addressing their key operational challenges not just in conventional reservoirs but also in mature fields, unconventionals, offshore, and in digitalization and automation.
Our focus is on accelerating the strategic deployment of our five strategic priorities of:
•Customer Experience enhancement;
•Creating the Future through innovation of our products, services and solutions;
•Organizational Vitality to hardness employee engagement, attract and retain talent, develop our people and
increase leadership effectiveness;
•Lean Operations to simplify and drive waste out of the business for increased productivity, quality, decreased
cycle-times and for improved service levels, and;
•Financial Performance and value throughout industry cycles with sustainable profitability and cash flow
generation.
We have driven this solution-based focus across our organization through a commitment to improving safety and service quality, embedding a returns-focused mindset in our organization, and developing and commercializing new technologies that add value to our customers’ operations.
Markets
Demand for our industry’s products and services is driven by many factors, including commodity prices, the number of oil and gas rigs and wells drilled, depth and drilling conditions of wells, number of well completions, age of existing wells, reservoir depletion, regulatory environments and the level of workover activity worldwide.
Weatherford International plc – 2023 Form 10-K | 2
Table of Contents Item 1 | Business
Technology is critical to the energy services marketplace as a result of the maturity of the world’s oil and natural gas reservoirs, declining production rates and the nature of complex well designs, in both land and offshore markets. Customers continue to seek, test and use technologies that accelerate and optimize production at an increasing rate. We invest substantial resources into building our technology offerings, which enable our customers to evaluate, develop and produce from their oil and natural gas reservoirs more efficiently. Our products and services are designed to enable our customers to increase production rates while reducing their costs of drilling and production.
Reportable Segments
We offer our services and technologies in relation to the well life cycle and have three reportable segments: (1) Drilling and Evaluation (2) Well Construction and Completions, and (3) Production and Intervention. All of our segments are enabled by a suite of digital monitoring, control and optimization solutions using advanced analytics to provide safe, reliable and efficient solutions throughout the well life cycle, including responsible abandonment at the end of the well’s productive life.
Products and Services
Drilling and Evaluation (“DRE”) offers a suite of services including managed pressure drilling, drilling services, wireline and drilling fluids. DRE offerings range from early well planning to reservoir management through innovative tools and expert engineering to optimize reservoir access and productivity.
Managed Pressure Drilling helps to manage wellbore pressures to optimize drilling performance. We incorporate various technologies, including rotating control devices and advanced automated control systems, as well as several drilling techniques, such as closed-loop drilling, air drilling, managed-pressure drilling and underbalanced drilling.
Drilling Services includes directional drilling, logging while drilling, measurement while drilling and rotary-steerable systems. We provide a full range of downhole equipment, including high-temperature and high-pressure sensors, drilling reamers and circulation subs.
Wireline includes open-hole and cased-hole logging services that measure the geophysical properties of subsurface formations to determine production potential, locate resources and detect cement and casing integrity issues. We also execute well intervention and remediation operations by conveying equipment via cable into existing wells.
Drilling Fluids provides fluids and chemicals essential to the drilling process.
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.
Tubular Running Services provides equipment, tubular handling, tubular management and tubular connection services for the drilling, completions, and workover of various types of wells. We include conventional rig services, automated rig systems, real-time torque-monitoring, and remote viewing of the makeup and breakout verification process, all underscored by our technology and procedural protocols to provide casing and tubular running operations with superior efficiency, and reduced health, safety, and environmental risks.
Cementation Products enable operators to centralize the casing throughout the wellbore and control the displacement of cement and other fluids for proper zonal isolation. Specialized equipment includes plugs, float and stage equipment and torque-and-drag reduction technology. Our cementation engineers analyze customer requirements and provide software enabled design input from pre-job planning to installation.
Completions offer customers a comprehensive line of completion tools, such as safety valves, production packers, downhole reservoir monitoring, flow control, isolation packers, multistage fracturing systems and sand-control technologies that set the stage for maximum production with minimal cost per barrel.
Liner Hangers suspend a casing string within a previous casing string thereby eliminating the need to run casing to the surface. We offer a comprehensive liner-hanger portfolio, along with engineering and execution experience, for a wide range of applications that include high-temperature and high-pressure wells.
Weatherford International plc – 2023 Form 10-K | 3
Table of Contents Item 1 | Business
Well Services provides through tubing products and services which ensure consistent delivery of well solutions that extend the economic life of our customer's assets.
Production and Intervention (“PRI”) offers production optimization technologies through the Company’s ability to design and deliver a complete production ecosystem ranging from boosting productivity to responsible well abandonment for our customers. The primary offerings are intervention services & drilling tools, artificial lift, digital solutions, sub-sea intervention and pressure pumping services in select markets. 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.
Intervention Services & Drilling Tools provides re-entry, fishing and well abandonment services as well as patented bottom hole, tubular-handling equipment, pressure-control equipment and drill pipe and collars for various types of wells.
Artificial Lift provides pressure enabling methods to produce reservoir fluids from wells lacking sufficient reservoir pressure for natural flow. We provide most forms of lift, including reciprocating rod lift systems, progressing cavity pumping, gas-lift systems, hydraulic-lift systems, plunger-lift systems and hybrid lift systems for special applications. We also offer related automation and control systems.
Digital Solutions provides software, automation, and flow measurement solutions. For our customers’ drilling operations, the solutions deliver data aggregation, engineering, and optimization including performance analytics in real-time. For our customers’ production operations, the solutions provide flow measurement, surveillance, and control to deliver production optimization by integrating workflows and data for the well, surface facilities and the reservoir.
Sub-Sea Intervention provides electrical and hydraulic power transmission to subsea equipment in order to facilitate workovers and abandonment in deep and ultra-deep-water operations in select markets.
Pressure Pumping Services offers advanced chemistry-based solutions and associated pumping services for safe and effective production enhancements. In select international markets, we provide pressure pumping and reservoir stimulation services, including acidizing, fracturing, cementing, and coiled-tubing intervention.
Competition
We provide our products and services worldwide and compete with a number of global and regional competitors. Our principal competitors include SLB, Halliburton, Baker Hughes, National Oilwell Varco, ChampionX and Expro Group Holdings. We also compete with various other suppliers who provide products and services within a smaller cross section of our product line portfolio either locally, regionally, or globally. Competition is based on a number of factors, including performance, safety, quality, reliability, service, price, response time and, in some cases, depth and breadth of products. The energy services business is highly competitive, which may adversely affect our ability to succeed. Additionally, the consolidations of and acquisitions by our competitors are difficult to predict and may impact our business as a result.
Raw Materials
We purchase a wide variety of raw materials, as well as parts and components. We integrate products and components produced by other parties into the products and systems we sell. We continually evaluate and invest in our integrated supply chain in order to reduce materials constraints and impacts from inflationary pressures, while improving lead times and supporting our sustainability efforts.
Customers
Substantially all of our customers are engaged in the energy industry and include national oil companies, international and independent oil and natural gas companies as well as new energy companies.
Weatherford International plc – 2023 Form 10-K | 4
Table of Contents Item 1 | Business
Research, Development and Patents
In addition to maintaining world-class technology and training centers throughout the world, we have research, development, and engineering teams focused on developing new technologies and improving existing products and services to meet customer demands for improved drilling performance, well integrity, and enhanced reservoir productivity, with emphasis on efficiency, reliability, safety and the environment. We also develop technologies for new energy markets, in addition to the existing oil and gas markets in which we traditionally operate. Weatherford has significant expertise, trade secrets, intellectual property and know-how with respect to the design, manufacturing, and use of our equipment and the provision of our services. As many areas of our business rely on proprietary technology, we seek to protect and defend our intellectual property through trade secrets and patent protection both inside and outside the U.S. for products and methods that we believe to have commercial significance. Although in the aggregate our patents are important to the manufacturing and marketing of many of our products and services, we do not believe that the expiration of any one of our patents would have a materially adverse effect on our business.
Seasonality
Weather and natural phenomena can temporarily affect the level of demand for our products and services; however, the widespread geographical locations of our operations serve to mitigate the overall impact on our business in any particular geographic region. Spring months in Canada, summer in the Southern hemisphere, and winter months in the North Sea and Russia typically have lower demand, driving a negative impact on operations. Additionally, heavy rains, hurricanes, unusual wildfires, extreme freezes or other unpredictable or unusually harsh natural phenomena could lengthen the periods of reduced activity and have a detrimental impact on our results of operations. In addition, customer spending patterns for our products and services may result in higher activity in the fourth quarter of each calendar year as our customers seek to fully utilize their annual budgets.
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 6% of our total revenue for the year ended December 31, 2023, and were approximately 7% of our total revenues for the years ended December 31, 2022 and 2021. 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. As of December 31, 2022, our Russia operations included $30 million in cash, $98 million in other current assets, $65 million in property, plant and equipment and other non-current assets, and $52 million in liabilities.
We continue to closely monitor and evaluate the developments in Russia as well as any changes in international laws and sanctions. We believe that operational complexity will increase over time and therefore continually evaluate these potential impacts on our business. As such, we continue to actively evaluate various options, strategies and contingencies with respect to our business in Russia, including, but not limited to:
•continuing the business in compliance with applicable laws and sanctions;
•evaluating the continued use or change in products, equipment and service offerings we currently provide in
Russia;
•curtailing or winding down our activities over time;
•potentially divesting some or all of our assets or businesses in Russia, which could include the option of re-entering the country if and when sanctions or applicable laws would allow for the same and;
•potential nationalization of the business.
Federal Regulation and Environmental Matters
Our operations are subject to federal, state and local laws and regulations in the U.S. and globally relating to the energy industry in general and the environment in particular. Our 2023 expenditures to comply with environmental laws and regulations were not material, and we currently do not expect the cost of compliance with environmental laws and regulations for 2024 to be material. We continuously monitor and strive to maintain compliance with changes in laws and regulations that impact our business.
Weatherford International plc – 2023 Form 10-K | 5
Table of Contents Item 1 | Business
We have obligations and expect to incur capital, operating and maintenance, and remediation expenditures, as a result of compliance with environmental laws and regulations. Among those obligations, are the current requirements imposed by the Texas Commission on Environmental Quality (“TCEQ”) at a former facility in Midland, Texas where we are performing a TCEQ-approved Remedial Action Plan (“RAP”) to address contaminated ground water. The performance of the RAP and related expenses are scheduled to be performed over a twenty to thirty-year period and, may cost as much as $11 million, all of which were recorded as an undiscounted obligation on the Consolidated Balance Sheets as of December 31, 2022, and remains unchanged as of December 31, 2023.
Human Capital Management
Focus on People and Culture
At Weatherford, our global team is driven to further our mission – producing energy for today and tomorrow. Pivotal to our culture and ensuring we fulfill our mission and vision is our “One Weatherford” spirit – individually, we are impressive, and together, we are unstoppable. Our One Weatherford spirit motivates our global teams to collaborate for shared success and to seek out unique perspectives, fostering a culture where everyone can grow and contribute.
Our global team comprises experts in various disciplines, including engineering, oilfield services support, and multiple corporate functions. In addition to our commitment to operating sustainably with safety, quality, and integrity, we are also focused on recruiting, developing, and promoting an employee culture that revolves around the following Core Values:
•Passion: We are energized by our work and inspired to make a positive impact in our industry, for our customers, across our Company, and in our communities;
•Accountability: We operate with integrity, enable our people and teams to be successful, and aim to be true to our word;
•Innovation: We are driven to deliver advancements that propel our Company, industry, and customers forward; and
•Value Creation: We aspire to achieving long-term value for all our stakeholders by providing compelling and unique benefits through technology differentiation and operational excellence.
We believe that ensuring we have the right talent in place is essential to delivering positive results for the business. We remain focused on developing our talent through training, competency, and mentoring, as well as attracting diverse and qualified individuals who will bring fresh perspectives and skill sets to the team. Through role-specific competency-based training and leadership development programs, we seek to expand our employees’ skill sets and regularly reinforce important topics that align with our core values and strategic priorities.
Focus on Safety
Weatherford is committed to the health, safety, and well-being of our employees, customers, and the communities in which we operate. We strive to be a company that is incident free, delivers on our promises, and leaves the environments and communities in which we operate better than we found them. Our company values are built on the foundation of safety, and we realize that a safe operation is indeed an efficient operation. Our commitment to safety and service quality is embedded into every level of our organization. Our Operational Excellence and Performance System (“OEPS”) is our integrated quality, health, safety, security, and environmental management system. OEPS meets or exceeds criteria outlined by international management system standards such as ISO 45001, supports our employees in the field, and enables us to deliver on our customer commitments without sacrificing quality, health, safety, security, or environmental performance. In addition, we have safety programs that are designed to educate employees and our Stop Work Authority program empowers them to intervene when they see or anticipate unsafe behaviors or conditions.
Compensation
We believe in aligning our employees’ compensation with the positive performance of our Company and returns realized for our shareholders. The goal of our compensation programs is to provide competitive compensation opportunities to each of our employees that are well-balanced between our current and long-term strategic priorities, that discourage excessive or unnecessary risk taking, and that reward our employees appropriately for their efforts. We are committed to maintaining and fostering a culture grounded in the principles inherent in pay-for-performance over the short and long-term for our employees eligible to receive a bonus. Through this culture, we strive to attract, motivate, retain, and reward our employees for their work that contributes to building our brand and to sustaining our success in the marketplace. We believe our culture of aligning our compensation programs with our strategic priorities supports a cohesive drive towards value creation for all our stakeholders.
Weatherford International plc – 2023 Form 10-K | 6
Table of Contents Item 1 | Business
Diversity, Equity and Inclusion
We understand the importance of operating collaboratively and inclusively across all levels of our organization, embracing the full spectrum of diversity among our employees, and recognizing the strength and competitive advantages our differences afford us as a Company. Our Diversity, Equity, and Inclusion (“DE&I”) Program is a core element of our One Weatherford culture. Our DE&I efforts aim to provide learning, engagement, and philanthropic opportunities to help our people and communities flourish. The executive team and frontline employees champion our commitment to embedding our DE&I Program into our organization.
In 2023, we continued to advance our program and awareness throughout the organization, including creating DE&I strategies for each region and conducting celebrations across the Company that foster collaboration and meaningful conversations regarding DE&I. We trained our employees on unconscious bias and continued our focus on NextGen, our field engineering graduate program designed to accelerate the development of defined competencies and skillsets to prepare participants for future leadership positions, as well as our Localization programs for select customers to develop local talent. In addition, we expanded participation in the Women of Weatherford (“WOW”), an employee resource group that seeks to engage, support, empower, and inspire women to foster professional growth and advancement across our regions and employee levels.
Community Impact and Volunteering
In addition to investing in our employees, we are committed to making a positive impact in the communities in which we live and work. Across the globe, our employees give back to organizations who need support in terms of donated items, volunteered time, and financial giving. For example, our team in Canada participates in an annual radiothon to support a local hospital, and our offices across the Latin America and Europe and Africa regions donate time and resources to orphanages, hospitals, and schools to support children and their families. In the United States, we continue to raise funds and awareness to find a cure for Multiple Sclerosis (“MS”) through the MS Society and through our annual Weatherford Walks event, we raised approximately $500,000 benefiting a number of local not-for-profit organizations.
Employee Statistics
As of December 31, 2023, Weatherford had approximately 18,500 employees globally. Some of our operations are subject to union contracts and these contracts cover approximately 17% of our employees.
Weatherford International plc – 2023 Form 10-K | 7
Table of Contents Item 1 | Business
Executive Officers of Weatherford
The following table sets forth, as of February 7, 2024, the names and ages of the executive officers of Weatherford, including all offices and positions held by each for at least the past five years. There are no family relationships between the executive officers of the Company or between any director and any executive officer of the Company.
| Name | Age | Current Position and Five-Year Business Experience | ||||||
| Girishchandra K. Saligram | 52 | President and Chief Executive Officer of Weatherford International plc, since October 2020 | ||||||
Senior Vice President and Chief Operating Officer of Exterran Corporation from August 2018 to September 2020 | ||||||||
| Arunava Mitra | 51 | Executive Vice President and Chief Financial Officer of Weatherford International plc, since January 2023 | ||||||
| Executive Vice President and Chief Financial Officer of Mitsubishi Power Americas Inc. from October 2021 to December 2022 | ||||||||
| Executive Vice President and Chief Financial Officer of Mitsubishi Hitachi Power Systems of Americas Inc. from October 2014 to October 2021 | ||||||||
Scott C. Weatherholt (a) | 46 | Executive Vice President, General Counsel, and Chief Compliance Officer of Weatherford International plc, since July 2020 | ||||||
| Senior Vice President and General Counsel of Arena Energy, L.P., from September 2019 to July 2020 | ||||||||
| Executive Vice President, General Counsel, and Corporate Secretary at Midstates Petroleum Company, Inc., from February 2015 to August 2019 | ||||||||
Richard D. Ward | 55 | Executive Vice President, Global Field Operations of Weatherford International plc, since January 2024 | ||||||
Senior Vice President, Subsea Production Systems of Baker Hughes Co, from May 2021 to December 2022 | ||||||||
Senior Vice President, Strategic Planning & Solutions of Baker Hughes Co, from October 2019 to May 2021 | ||||||||
Vice President, Marketing, Strategy & Solutions of Baker Hughes Co, from August 2017 to October 2019 | ||||||||
David J. Reed | 50 | Executive Vice President and Chief Commercial Officer of Weatherford International plc, since January 2024 | ||||||
Senior Vice President and Chief Commercial Officer of Weatherford International plc, from August 2021 to December 2023 | ||||||||
Vice President of Sales, Tenaris, from July 2015 to January 2021 | ||||||||
Depinder Sandhu | 48 | Executive Vice President, Global Product Lines of Weatherford International plc, since January 2024 | ||||||
Senior Vice President, Global Product Lines of Weatherford International plc, from December 2021 to December 2023 | ||||||||
Senior Director, Corporate Strategy of Weatherford International plc, from April 2021 to November 2021 | ||||||||
Vice President, Business Development & Strategy of Weatherford International plc, from July 2020 to March 2021 | ||||||||
Director, Service Delivery of Weatherford International plc, from November 2017 to May 2020 | ||||||||
| Desmond J. Mills | 51 | Senior Vice President and Chief Accounting Officer of Weatherford International plc, since November 2021 (Interim Chief Financial Officer August 2022 to January 2023) | ||||||
Vice President and Chief Accounting Officer of Weatherford International plc, from March 2021 to November 2021 | ||||||||
| Segment Compliance Manager, Construction Industries Segment, Caterpillar Inc., from July 2020 to March 2021 | ||||||||
| Division Chief Financial Officer, Integrated Components and Solutions Division, Caterpillar Inc., from September 2018 to July 2020 | ||||||||
Weatherford International plc – 2023 Form 10-K | 8
Table of Contents Item 1 | Business
(a)Prior to joining Weatherford, Mr. Weatherholt was the General Counsel at Midstates Petroleum Company, Inc. when the company filed for bankruptcy protection on May 1, 2016 in the Federal Bankruptcy Court for the Southern District of Texas (Houston Division) and served the company before, during and after its bankruptcy. In addition, he was the Senior Vice President & General Counsel of Arena Energy, LP, which filed for bankruptcy protection on August 20, 2020, in the Federal Bankruptcy Court for the Southern District of Texas (Houston Division) approximately 4 weeks after his departure from the company.
Item 1A. Risk Factors.
An investment in our securities involves various risks. You should consider carefully all the risk factors described below, the matters discussed herein under “Forward-Looking Statements” and other information included and incorporated by reference in this Form 10-K, as well as in other reports and materials that we file with the SEC. If any of the risks described below, or elsewhere in this Form 10-K, were to materialize, our business, financial condition, results of operations, cash flows and or prospects could be materially adversely affected. In such case, the trading price of our ordinary shares could decline, and investors could lose part or all of their investment. Additional risks and uncertainties not currently known to us or that we currently deem immaterial may also materially adversely affect our financial condition, results of operations and cash flows.
Energy Services Industry Risks
Our business is dependent on capital spending by our customers which is greatly affected by fluctuations in oil and natural gas prices and the availability and cost of capital; reductions in capital spending by our customers has had, and could continue to have, an adverse effect on our business, financial condition and results of operations.
Demand for our products and services is tied to the level of exploration, development and production activity and the corresponding capital and operating spending by oil and natural gas exploration and production companies, including national oil companies. The level of exploration, development and production activity is directly affected by fluctuations in oil and natural gas prices, which historically have been volatile and are likely to continue to be volatile in the future, especially given current geopolitical and economic conditions. Low oil and natural gas prices and decline in global demand for oil and natural gas, including reduced demand as a result of a pandemic, have previously led to our customers, including national oil companies and large oil and natural gas exploration and production companies, to greatly reduce planned future capital expenditures. Factors affecting the prices of oil and natural gas include, but are not limited to:
•the level of supply and demand for oil and natural gas;
•the ability or willingness of the Organization of Petroleum Exporting Countries (“OPEC”) and the expanded alliance (“OPEC+”) and other high oil exporting non-OPEC+ nations to set and maintain oil production levels;
•the level of oil and natural gas production in the U.S. and by other non-OPEC+ countries;
•oil refining capacity;
•shifts in end-customer preferences toward sustainable energy sources, fuel efficiency and the use of natural gas;
•the cost of, and constraints associated with, producing and delivering oil and natural gas;
•governmental regulations, including the policies of governments regarding the exploration for and production and
development of their oil and natural gas reserves;
•weather conditions, unusual wildfires, natural disasters, and health or similar issues, such as pandemics or epidemics;
•worldwide political, military, and economic conditions (including impacts from the Russia Ukraine Conflict); and
•increased demand for alternative energy and electric vehicles, including government initiatives to promote the use of
sustainable, renewable energy sources and public sentiment around alternatives to oil and natural gas.
Reductions in capital spending or reductions in the prices we receive for our products and services provided to our customers could have a material adverse effect on our business, financial condition and results of operations. Spending by exploration and production companies can also be impacted by conditions in the capital markets, which may be volatile at times. Limitations on the availability of capital or higher costs of capital may cause exploration and production companies to make additional reductions to their capital budgets even if oil and natural gas prices increase from current levels. In addition, the transition of the global energy sector from primarily a fossil fuel-based system to renewable energy sources could affect our customers' levels of expenditures. Any such reductions in spending could curtail drilling programs, as well as discretionary spending on well services, which may result in a reduction in the demand for certain of our products and services, the rates we can charge for and the utilization of our assets, any or all of which could have a material adverse effect on our business, financial condition and results of operations.
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Our fulfillment system relies on a global network of external suppliers and service providers, which may be impacted by macroeconomic conditions and geopolitical conflict and instability. Shortages, supplier capacity constraints, supplier production disruptions, supplier quality and sourcing issues or price increases could have a material adverse effect on our business, financial condition and results of operations.
We purchase a variety of raw materials, as well as parts and components made by other manufacturers and suppliers for use in our manufacturing facilities. Our global supply chain is also subject to macroeconomic conditions and political risks. Adverse macroeconomic conditions, including inflation, slower growth or recession and higher interest rates could create disruptions in our supply chain. Similarly, geopolitical risks, including instability resulting from civil unrest, political demonstrations, strikes and armed conflict or other crises in the oil and gas producing regions, such as the Russia Ukraine Conflict and the resulting sanctions, could change the global supply chain dynamics and demand. A disruption in deliveries to or from suppliers or decreased availability of materials could have an adverse effect on our ability to meet our commitments to customers or increase our operating costs. Also, certain parts and equipment that we use in our operations may be available only from a small number of suppliers, manufacturers or service providers, or in some cases may be sourced through a single supplier, manufacturer or service provider. A disruption in the deliveries from such third‑party suppliers, manufacturers or service providers, capacity constraints, production disruptions, price increases, quality control issues, recalls or other decreased availability of parts and equipment could adversely affect our ability to meet our commitments to customers and have a material adverse effect on our business, financial condition and results of operations.
Climate change, environmental, social and governance (“ESG”) and other sustainability initiatives may result in regulatory or structural industry changes that could require significant operational changes and expenditures, reduce demand for our products and services and adversely affect our business, financial condition, results of operations, stock price or access to capital markets.
Sustainability initiatives are a growing global movement. Continuing political and social attention to these issues has resulted in both existing and pending international agreements and national, regional and local legislation, regulatory measures, reporting obligations and policy changes. Also, there is increasing societal pressure in some of the areas where we operate, to limit greenhouse gas emissions as well as other global initiatives. These agreements and measures, including the Paris Climate Accord, may require, or could result in future legislation, regulatory measures or policy changes that would require, significant equipment modifications, operational changes, taxes, or purchases of emission credits to reduce emission of greenhouse gases from our operations or those of our customers, which may result in substantial capital expenditures and compliance, operating, maintenance and remediation costs. As a result of heightened public awareness and attention to these issues as well as continued political and regulatory initiatives to reduce the reliance upon oil and natural gas, demand for hydrocarbons may be reduced, which could have an adverse effect on our business, financial condition, and results of operations. The imposition and enforcement of stringent greenhouse gas emissions reduction requirements could severely and adversely impact the oil and natural gas industry and therefore significantly reduce the value of our business.
Certain financial institutions, institutional investors and other sources of capital have begun to limit or eliminate their investment in financing of conventional energy-related activities due to concerns about climate change, which could make it more difficult for our customers and for us to finance our respective businesses. Increasing attention to climate change, ESG and sustainability has resulted in governmental investigations, and public and private litigation, which could increase our costs or otherwise adversely affect our business or results of operations.
In addition, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to ESG matters. Such ratings are used by some investors to inform their investment and voting decisions. Unfavorable ESG ratings may lead to increased negative investor sentiment toward us and our industry and to the diversion of investment to other companies or industries, which could have a negative impact on the price of our securities and our access to and costs of capital.
Any or all of these ESG and sustainability initiatives may result in significant operational changes and expenditures, reduced demand for our products and services, and could materially adversely affect our business, financial condition, results of operations, stock price or access to capital markets.
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Failure to effectively and timely address the need to operate more sustainably and with a lower carbon footprint and impact could adversely affect our business, results of operations and cash flows.
Our long-term success may depend on our ability to effectively lower the carbon impact of how we deliver our products and services to our customers as well as adapting our technology portfolio for potentially changing government requirements and customer preferences towards more sustainable competitors. We may also consider engaging with our customers to develop solutions to decarbonize our customers’ oil and natural gas operations. We could potentially lose engagement with customers, investors and/or certain financial institutions if we fail or are perceived to fail at effectively and timely addressing the need to conduct our operations and provision of services to our customers more sustainably and with a lower carbon footprint which could materially adversely affect our business, financial condition and results of operations.
Failure to effectively and timely address the energy transition could materially adversely affect our business, financial condition and results of operations.
Our long-term success depends on our ability to effectively participate in the energy transition, which will require adapting our technology portfolio to potentially changing market demand for products and services and to support the production of energy from sources other than hydrocarbons (e.g., geothermal, carbon capture, responsible abandonment, wind, solar and hydrogen). If the energy transition landscape changes faster than anticipated or in a manner that we do not anticipate, demand for our products and services could be adversely affected. Furthermore, if we fail or are perceived to not effectively implement an energy transition strategy, or if investors or financial institutions shift funding away from companies focused primarily or solely in fossil fuel-related industries, it could materially adversely affect our business, financial condition, results of reparations and our access to capital or the market for our securities.
Severe weather, including extreme weather conditions and unusual wildfires, has in the past, and could in the future, adversely affect our business and results of operations.
Our business has been, and in the future will likely be, affected by severe weather and unusual wildfires in areas where we operate, which could materially adversely affect our operations. In addition, the frequency and severity of these events may also materially affect our operations and financial results. Any such events could have a material adverse effect on our business, financial condition and results of operations.
Liability claims resulting from catastrophic incidents could have a material adverse effect on our business, financial condition and results of operations.
Drilling for and producing hydrocarbons, and the associated products and services that we provide, include inherent dangers that may lead to property damage, personal injury, death or the discharge of hazardous materials into the environment. Many of these events are outside our control. Typically, we provide products and services at a well site where our personnel and equipment are located together with personnel and equipment of our customer and third parties, such as other service providers. At many sites, we depend on other companies and personnel to conduct drilling and other operations in accordance with appropriate safety standards. From time to time, personnel are injured, or equipment or property is damaged or destroyed, as a result of accidents, equipment failures, faulty products or services, failure of safety measures, uncontained formation pressures or other dangers inherent in drilling for or producing oil and natural gas. Any of these events can be the result of human error. With increasing frequency, our products and services are deployed on more challenging prospects both onshore and offshore, where the occurrence of the types of events mentioned above can have an even more catastrophic impact on people, equipment or the environment. Such events may expose us to significant potential losses which could have a material adverse effect on our business, financial condition and results of operations.
Business and Operational Risks
A significant portion of our revenue is derived from our operations outside the U.S., which exposes us to risks inherent in doing business in each of the approximately 75 countries in which we operate.
The U.S. accounted for 16%, 20% and 19% of revenues in 2023, 2022 and 2021, respectively. The rest of our revenues were from non-U.S. operations. Operations in countries other than the U.S. are subject to various risks, including:
•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);
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•general global economic repercussions related to U.S. and global inflationary pressures and potential recessionary concerns;
•failure to ensure on-going compliance with current and future laws and government regulations, including but not limited to those related to the Russia Ukraine Conflict, and environmental and tax and accounting laws, rules and regulations;
•changes in, and the administration of, treaties, laws, and regulations, including in response to issues related to the Russia Ukraine Conflict and the potential for such issues to exacerbate other risks we face;
•exposure to expropriation of our assets, deprivation of contract rights or other governmental actions;
•social unrest, acts of terrorism, war or other armed conflict;
•fraud and political corruption;
•varying international laws and regulations;
•adequate responses to a pandemic and related restrictions;
•confiscatory taxation or other adverse tax policies;
•trade and economic sanctions or other restrictions imposed by the European Union, the United Kingdom, the U.S. or other countries, including in response to the Russia Ukraine Conflict;
•exposure under the U.S. Foreign Corrupt Practices Act or similar governmental legislation in other countries; and
•restrictions on the repatriation of income or capital.
A concentration of our accounts receivables and revenues were related to one customer and significant changes to the demand or health of the customer could adversely impact our consolidated results of operations, financial condition and statements of cashflows.
Approximately 10% of our 2023 revenue and approximately 22% of our December 31, 2023 accounts receivables were related to our largest customer in Mexico. Additionally, during the fourth quarter of 2023, we entered into a credit default swap (“CDS”) with a third-party financial institution as described in “Note 10 – Derivative Financial Instruments” related to a secured loan between that third-party financial institution and our largest customer in Mexico. The secured loan was utilized by this customer to pay certain of our outstanding receivables. We expect the concentration risk to continue into 2024.
Business slowdowns or other items impacting the financial health of the customer could potentially have an adverse impact on our results of operations.
Our business could be negatively affected by cybersecurity incidents and other technology disruptions.
We rely heavily on information systems and other digital technology to conduct and protect our business. These information systems and other digital technology are subject to the risk of increasingly sophisticated cybersecurity attacks, incursions or other incidents such as unauthorized access to data and systems, loss or destruction of data (including confidential customer, supplier and employee information), computer viruses, or other malicious code, phishing and cyberattacks, and other similar events. These incidents could arise from numerous sources, including those outside our control, including fraud or malice on the part of third parties, governmental actors, accidental technological failure, electrical or telecommunication outages, failures of computer servers or other damage to our property or assets, human error, complications encountered as existing systems are maintained, repaired, replaced, or upgraded or outbreaks of hostilities or terrorist acts.
Given the rapidly evolving nature of cybersecurity incidents, there can be no assurance that the controls we have designed and implemented to prevent or limit the effects of cybersecurity incidents or attacks will be sufficient in preventing or limiting the effects of all such incidents or attacks or be able to avoid a material impact to our systems should such incidents or attacks occur. Recent widespread cybersecurity incidents and attacks in the U.S. and elsewhere have affected many companies. To date, none of these have had a material impact on us. Cybersecurity incidents can result in the disclosure of confidential or proprietary customer, supplier or employee information; theft or loss of intellectual property; impairment in our ability to operate or conduct our business; damage to our reputation with our customers, suppliers, employees and the market; failure to meet customer requirements or result in customer dissatisfaction; legal and regulatory exposure, including fines or legal proceedings (including as a result of our failure to make adequate or timely disclosures to the public, government agencies or affected individuals); damage to equipment (which could cause environmental or safety issues) and other financial costs and losses, including as a result of any remediation efforts. While Weatherford imposes controls on third-party system connectivity to our systems, the risks from an attack via a third-party remain.
The occurrence of a cybersecurity incident can go unnoticed for a period of time despite efforts to detect and respond in a timely manner. Any investigation of a cybersecurity incident is inherently unpredictable, and it takes time before the completion of any investigation and before there is availability of full and reliable information. Even when an attack has been detected, it is not always immediately apparent what the full nature and scope of any potential harm may be, or how best to remediate it, and
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certain errors or actions could be repeated or compounded before they are discovered and remediated, all or any of which further increase the risks, costs and consequences of a cybersecurity event or other technology disruption. As cybersecurity incidents and attacks continue to evolve, we may be required to expend significant additional resources and incur significant expenses to continue to modify or enhance our protective measures or to investigate, respond to or remediate any information security vulnerabilities.
Depending on the nature and scope of the cybersecurity incident, it could have a material adverse effect on our business, reputation, financial condition and results of operations.
A pandemic significantly weakened demand for our products and services and had a substantial negative impact on our business, financial condition, results of operations and cash flows. A future pandemic may result in similar impacts.
The effects of the COVID-19 pandemic in 2020 and 2021, including actions taken by businesses and governments to contain the spread of the virus, resulted in a significant reduction in international and U.S. economic activity and severely impacted our business and our industry. The effects included adverse revenue and net income impacts; disruptions to our operations; customer shutdowns of oil and natural gas exploration and production; employee impacts from illness, school closures and other community response measures; and temporary closures of our facilities or the facilities of our customers and suppliers.
The COVID-19 pandemic, and the volatile regional and global economic conditions stemming from the pandemic, exacerbated the potential negative impact from many of the other risks we face. We believe that a future pandemic may result in similar impacts and could also include, but not limited to:
•Structural shift in the global economy and its demand for oil and natural gas as a result of changes in the way people work, travel and interact, or in connection with a global or regional recession or depression;
•Reduction of our global workforce to adjust to market conditions, including severance payments, retention issues, and an inability to hire employees when market conditions improve;
•Infections and quarantining of our employees and the personnel of our customers, suppliers and other third parties in areas in which we operate;
•Our insurance policies may not cover losses associated with pandemics or similar global health threats;
•Litigation risk and possible loss contingencies related to a pandemic and its impact, including with respect to commercial contracts, employment matters, personal injury and insurance arrangements; and
•Cybersecurity incidents, as our reliance on digital technologies increases, those digital technologies may become more vulnerable and experience a higher rate of cybersecurity attacks, intrusions or incidents in the current environment of remote connectivity, as well as increased geopolitical conflicts and tensions.
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Our business is dependent upon our ability to efficiently and effectively perform and provide products and services to our customers. As such, we are subject to risks associated with cost over-runs, operating cost inflation, global supply chain disruptions, labor availability, supplier and contractor pricing and performance, and our need to continually improve and invest in our people, processes and systems. Our inability to efficiently and effectively mitigate these risks, or our inability to make timely investments could have an adverse effect on our business, financial condition and results of operations.
Our customers rely on our ability to efficiently perform and execute on the delivery of our products and services, and a low success rate could adversely impact margins and our ability to obtain market share. Additionally, we continuously identify opportunities to invest in our people, processes and systems, however, we may not be able to adjust quickly enough to capitalize on market share during times of industry growth, or the returns on our investments may not outpace margin deterioration at times of slower activity.
We sometimes provide integrated project management services in the form of long-term, fixed price contracts where we are both the project manager and service provider. Accordingly, under these contracts, we assume additional risks associated with engaging with certain third-party subcontractors, operating cost inflation, labor availability and productivity, global supply chain disruptions, supplier pricing and performance, and potential claims for liquidated damages. If we are unable to complete these contracts effectively and timely, it could potentially have an adverse impact on our results of operations.
Our operational and financial growth, in part, is dependent upon our liquidity requirements and the adequacy of our capital resources.
Our liquidity, including our ability to meet our ongoing operational obligations, as well as service our debt, is dependent upon, among other things: (i) our ability to maintain adequate cash on hand; (ii) our ability to generate cash flow from operations; (iii) our ability to access the capital markets; and (iv) changes in market conditions that would negatively impact our revenue or our profits.
At times, the energy industry has faced negative sentiment in the capital markets which has impacted the ability of participants to access appropriate amounts of capital upon suitable terms. This negative sentiment has not only impacted our customers in North America, it has also affected the availability and the pricing for most credit lines and other capital resources extended to participants in the industry, including us.
We utilize letters of credit and performance and bid bonds to provide credit support to our customers. If the beneficiaries were to call the letters of credit issued under our committed and or uncommitted facilities, our available cash balance may be reduced by the amount called and it could have an adverse impact on our business, operations, and financial condition.
As of December 31, 2023, we had zero borrowings outstanding under our amended and restated credit agreement (the “Credit Agreement”), and $376 million of letters of credit outstanding, consisting of the $270 million ($218 million for performance letters of credit and $52 million for financial letters of credit) under the Credit Agreement and another $106 million under various uncommitted bi-lateral facilities (of which there was $101 million in cash collateral held and recorded in “Restricted Cash” on the Consolidated Balance Sheets).
In Latin America we utilize surety bonds as part of our customary business practice. As of December 31, 2023, we had $594 million of surety bonds outstanding. 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 mitigate the issue.
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We may not be fully indemnified against financial losses in all circumstances where damage to or loss of property, personal injury, death or environmental harm occur.
As is customary in our industry, our contracts typically require that our customers indemnify us for claims arising from the injury or death of their employees (and those of their other contractors), the loss or damage of their equipment (and that of their other contractors), damage to the well or reservoir and environmental impacts originating from the customer’s equipment or from the reservoir (including uncontained oil flow from a reservoir), claims arising from catastrophic events, such as a well blowout, fire, explosion and from environmental impacts below the surface. Conversely, we typically indemnify our customers for claims arising from the injury or death of our employees, the loss or damage of our equipment (other than equipment lost in the hole) or environmental impacts originating from our equipment above the surface of the earth or water.
Our indemnification arrangements may not protect us in every case. For example, our indemnity arrangements may be held to be overly broad in some courts and/or contrary to public policy in some jurisdictions, and to that extent may be unenforceable. Additionally, some jurisdictions which permit indemnification nonetheless limit its scope by applicable law, rule, order or statute. We may be subject to claims brought by third parties or government agencies with respect to which we are not indemnified. Furthermore, the parties from which we seek indemnity may not be solvent, may become bankrupt, may lack resources or insurance to honor their indemnities or may not otherwise be able to satisfy their indemnity obligations to us. The lack of enforceable indemnification could expose us to significant potential losses.
Further, our assets generally are not insured against loss from political violence such as war, terrorism or civil unrest. If any of our assets are damaged or destroyed as a result of an uninsured cause, we could recognize a loss of those assets.
Our indebtedness and liabilities could limit cash flow available for our operations, expose us to risks that could adversely affect our business, financial condition and results of operations and impair our ability to satisfy our financial obligations.
As of December 31, 2023, we had $168 million of short-term and $1.7 billion of long-term debt, all accruing interest. If business activity declines, or otherwise does not increase, our level of indebtedness could have negative consequences for our business, financial condition and results of operations, including:
•limiting our ability to obtain additional financing, or refinance our existing debt, on terms that are commercially acceptable to us;
•requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness, thereby reducing our free cash flow and the amount of our cash flow available for other purposes;
•limiting our flexibility in planning for, or reacting to, changes in our business;
•placing us at a possible competitive disadvantage with less leveraged competitors or competitors that may have better access to capital resources; and
•increasing our vulnerability to adverse economic and industry conditions.
Our ability to make scheduled payments on our debt obligations will depend on our financial and operating performance, which is subject to prevailing economic and competitive conditions and certain financial, business and other factors beyond our control. In the past, lower commodity prices and in turn lower demand for our products and services have negatively impacted our revenues, earnings and cash flows, and as a result, could adversely impact our liquidity position. Any harm to our business and operations resulting from our current or future level of indebtedness could adversely affect our ability to pay amounts due to our lenders and noteholders.
Our business may be exposed to uninsured claims and, as a result, litigation might result in significant potential losses. The cost of our insured risk management program may increase.
In the ordinary course of business, we become the subject of various claims and litigation. We maintain liability insurance, which includes insurance against damage to people, property and the environment, in commercially reasonable amounts, subject to self-insured retentions and deductibles.
Our insurance policies are subject to exclusions, limitations and other conditions and may not apply in all cases, for example where willful wrongdoing on our part is alleged. It is possible an unexpected judgment could be rendered against us in cases in
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which we could be uninsured and beyond the amounts we currently have reserved or anticipate incurring, and in some cases those potential losses could be material.
Our insurance may not be sufficient to cover any particular loss, or our insurance may not cover all losses. For example, although we maintain product liability insurance, this type of insurance is limited in coverage, and it is possible an adverse claim could arise in excess of our coverage. Additionally, insurance rates have in the past been subject to wide fluctuation and may be unavailable on terms that we or our customers believe are economically acceptable. Reductions in coverage, changes in the insurance markets and accidents affecting our industry may result in further increases in our cost and higher deductibles and retentions in future years and may also result in reduced activity levels in certain markets. As a result, we may not be able to continue to obtain insurance on commercially reasonable terms. Any of these events could have an adverse impact on our business, financial condition and results of operations.
There may be circumstances in which the interests of our significant shareholders could be in conflict with the interests of our other shareholders.
In the aggregate, certain funds associated with our nine largest shareholders own approximately 51% of our outstanding Ordinary Shares. Circumstances may arise in which these shareholders may have an interest in pursuing or preventing acquisitions, divestitures or other transactions, including the issuance of additional equity or debt, that, in their judgment, could enhance their investment in us or another company in which they invest. Such transactions might adversely affect us or could be in conflict with the interest of our other shareholders. In addition, our significant concentration of share ownership may adversely affect the trading price of our securities because investors may perceive disadvantages in owning securities in companies with significant shareholders and may restrict the trading volume in our ordinary shares.
The terms of our indebtedness restrict our current and future operations, particularly our ability to respond to changes or to pursue our business strategies.
The Credit Agreement and the indentures governing our 6.5% Senior Secured Notes maturing on September 15, 2028 (“2028 Senior Secured Notes”) and our 8.625% Senior Notes maturing April 30, 2030 (the “2030 Senior Notes”), contain certain restrictive or limiting covenants that may impose significant operating and financial restrictions on us and may limit our ability to engage in acts that we may believe to be in our long-term best interest, including the following:
•restricting additional indebtedness;
•restricting or limiting payment of dividends and other distributions;
•limiting prepayment, redemption or repurchase certain debt;
•limiting making loans and assets and;
•limiting selling assets and incur liens
These covenants and other restrictions may limit our ability to effectively operate our business, and to execute our growth strategy or take advantage of new business opportunities. These covenants and restrictions include minimum liquidity covenants, minimum interest coverage ratio, maximum ratio of funded debt, and certain other financial ratios, which may apply in certain circumstances, and other restrictions. Our ability to meet the liquidity thresholds or those financial ratios could be affected by events beyond our control.
A breach of the covenants and other restrictions in any of our indebtedness could result in an event of default thereunder. Such a default may allow the lenders, holders or the trustee, as applicable, to accelerate the related indebtedness which may result in the acceleration of any other indebtedness or to foreclose on our assets, of which substantially all of our assets are secured by certain lenders. In addition, an event of default under the Credit Agreement would permit the lenders thereunder to terminate all commitments.
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Failure to attract, retain and develop qualified personnel could impede our operations.
Our future success depends on our ability to attract, retain and develop qualified personnel to operate and to provide services and support for our business. We may experience employee turnover or labor shortages if our business requirements and/or expectations are inconsistent with the expectations of our employees or if our employees or potential employees decide to pursue employment in fields with less volatility than in the energy industry. Additionally, during periods of increased demand for products and services in our industry, competition for qualified personnel may increase and the availability of qualified personnel may be further constrained. Failure to attract, retain and develop qualified personnel could have an adverse effect on our results of operations, financial condition and cash flows.
Legal, Tax and Regulatory Risks
Our operations are subject to numerous current and future social and governance related legislative and regulatory measures both globally and in the specific geographic regions in which we and our customers operate, including treaties and international agreements related to “sustainability” initiatives like greenhouse gases, climate change and renewable energy sources. Our ability to comply with, and respond to current and future changes may expose us to significant liabilities, result in additional compliance costs and could reduce our business opportunities and revenues.
We are subject to various laws and regulations applicable to the energy industry related to pollution, protection of the environment and natural resources, public and worker health and safety, and treaties and international agreements related to climate change and the regulation of greenhouse gasses. These laws and regulations sometimes provide for strict liability for remediation costs, damages to natural resources, or threats to public health and safety. Strict liability can render us liable for damages without regard to our degree of care or fault. Some environmental laws also provide for joint and several strict liability for remediation of spills and releases of hazardous substances, and, as a result, we could be liable for the actions of others. Thus, an environmental claim could arise with respect to one or more of our current or former businesses, operations, products or services, or a business or property that one of our predecessors owned or used, and such claims could involve material expenditures. Generally, environmental laws have in recent years become more stringent and have sought to impose greater liability on a larger number of potentially responsible parties and have required increased costs to comply with their requirements. The scope of regulation of our industry and our products and services may increase further, including possible increases in liabilities, financial assurance, or funding requirements imposed by governmental agencies. Additional regulations on deepwater drilling in the Gulf of Mexico and elsewhere in the world could be imposed, and those regulations could limit our business where they are imposed.
In addition, members of the U.S. Congress, the U.S. Environmental Protection Agency and various agencies of several states within the U.S. frequently review, consider and propose more stringent regulation of hydraulic fracturing, a stimulation treatment routinely performed on oil and natural gas wells in low-permeability reservoirs. We previously provided (and may, in the future, resume providing) fracturing services to customers. Regulators periodically investigate whether any chemicals used in the hydraulic fracturing process might adversely affect groundwater or whether the fracturing processes could lead to other unintended effects or damages. In recent years, local and national governments (including several cities and states within the U.S.) passed new laws and regulations restricting or banning hydraulic fracturing. A significant portion of North American service activity today is directed at prospects that require hydraulic fracturing in order to produce hydrocarbons. Therefore, additional regulation could increase the costs of conducting our business by subjecting fracturing to more stringent regulation. Regulation of hydraulic fracturing could increase our cost of providing services or materially reduce our business opportunities and revenues if customers decrease their levels of activity or we cannot pass along cost to customers. We are unable to predict whether changes in laws or regulations or any other governmental proposals or responses will ultimately occur, and accordingly, we are unable to assess the potential financial or operational impact they may have on our business.
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Our environmental, social and governance commitments and disclosures may expose us to reputational risks and legal liability.
Increasing focus on ESG factors has led to enhanced interest in, and review of performance results by investors and other stakeholders, and the potential for litigation and reputational risk. In 2022, we made certain public commitments to various corporate ESG initiatives, including our commitment to achieve net-zero emissions for Scope 1 and 2 by 2050 and signing on to the UN Global Compact. Any failure, or perceived failure, to achieve or accurately report on our commitments in our disclosures, including our annual Sustainability Report and our other disclosures on these matters, could harm our reputation and adversely affect our client relationships or our recruitment and retention efforts, as well as expose us to potential legal liability. In addition, positions we take or do not take on social issues may be unpopular with some of our employees, our clients or potential clients, shareholders, investors, governments or advocacy groups, which may impact our ability to attract or retain employees or the demand for our services.
Increasing focus on ESG matters has resulted in the adoption of legal and regulatory requirements designed to mitigate the effects of climate change on the environment, as well as legal and regulatory requirements requiring climate, human rights and supply chain-related disclosures. We expect these types of regulatory requirements related to ESG matters to continue to expand globally. If new laws or regulations are more stringent than current legal or regulatory requirements or involve reporting information according to differing standards and frameworks in the countries in which we operate, we may experience increased compliance burdens and costs to meet such obligations. In addition, our selection of voluntary disclosure frameworks and standards, and the interpretation or application of those frameworks and standards, may change from time to time or may not satisfy varying regulatory requirements or the expectations of investors or other stakeholders.
Our ability to achieve our ESG commitments, including our goals relating to sustainability and inclusion and diversity, is subject to numerous risks, many of which are outside of our control. Examples of such risks include: (1) our ability to operate more sustainably and with a lower carbon footprint; (2) the availability and cost of low- or non-carbon-based energy sources and technologies; (3) evolving and potentially conflicting global regulatory requirements affecting ESG standards or disclosures; (4) the availability of suppliers that can meet our sustainability, diversity and other standards; and (5) our ability to recruit, develop, and retain diverse talent.
In addition, standards for tracking and reporting on ESG matters, including climate change and human rights related matters, have not been harmonized and continue to evolve. Methodologies for reporting ESG data may be updated requiring that previously reported ESG data be adjusted to reflect improvement in availability and quality of third-party data, changing assumptions, changes in the nature and scope of our operations and other changes in circumstances. Our processes and controls for reporting ESG matters across our operations and supply chain are evolving to address obtaining information that resides in multiple internal systems and responding to multiple disparate standards for identifying, measuring, and reporting ESG metrics, including ESG-related disclosures that may be required by the SEC, European and other regulators. Such standards are currently not consistent and may change over time, which could result in significant revisions to our current goals, reported progress in achieving such goals, or ability to achieve such goals in the future.
Adverse changes in tax laws both in the U.S. and abroad, changes in tax rates or exposure to additional income tax liabilities could have a material adverse effect on our results of operations.
Changes in tax laws could significantly increase our tax expense and require us to take actions, at potential significant expense, to seek to preserve our current level of tax expense.
In 2002, we reorganized from the U.S. to a foreign jurisdiction. There are frequent legislative proposals in the United States that attempt to treat companies that have undertaken similar transactions as U.S. corporations subject to U.S. taxes or to limit the tax deductions or tax credits available to United States subsidiaries of these corporations. Our tax expense could be impacted by changes in tax laws, tax treaties or tax regulations or the interpretation or enforcement thereof or differing interpretation or enforcement of applicable law by the U.S. Internal Revenue Service and other taxing jurisdictions, acting in unison or separately. The inability to reduce our tax expense could have a material impact on our consolidated financial statements.
The Organization of Economic Cooperation and Development (“OECD”), which represents a coalition of member countries, issued various white papers addressing Tax Base Erosion and Jurisdictional Profit Shifting. The recommendations in these white papers are generally aimed at combating what they believe is tax avoidance. Numerous jurisdictions in which we operate have been influenced by these white papers as well as other factors and are increasingly active in evaluating changes to their tax laws. In addition, the OECD has advanced reforms focused on global profit allocation and implementing a global minimum tax rate of at least 15% for large multinational corporations on a jurisdiction-by-jurisdiction basis, known as “Pillar Two.” On October 8, 2021, the OECD announced an accord endorsing and providing an implementation plan for Pillar Two agreed upon by 136 nations. On December 15, 2022, the European Council formally adopted a European Union directive on the implementation of the
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plan by January 1, 2024. Numerous countries, including Ireland have enacted legislation implementing Pillar Two effective January 1, 2024. This is not expected to materially increase the taxes we owe; however, if future legislation is enacted to implement the accord in some or all the jurisdictions in which we have operations, it could materially increase the amount of taxes we owe, thereby negatively affecting our results of operations and our cash flows from operations.
Our effective tax rate has fluctuated in the past and may fluctuate in the future. Future effective tax rates could be affected by changes in the composition of earnings in countries in which we operate with differing tax rates, non-income-based taxes, changes in tax laws, or changes in deferred tax assets and liabilities. We assess our deferred tax assets on a quarterly basis to determine whether a valuation allowance may be required. We have recorded a valuation allowance on approximately 90% of our deferred tax assets.
If a U.S. person is treated as owning at least 10% of our shares, such holder may be subject to adverse U.S. federal income tax consequences.
As a result of the Tax Cuts and Jobs Act of 2017, many of our non-U.S. subsidiaries are now classified as “controlled foreign corporations” for U.S. federal income tax purposes due to the expanded application of certain ownership attribution rules within a multinational corporate group. If a U.S. person is treated as owning (directly, indirectly or constructively) at least 10% of the value or voting power of our shares, such person may be treated as a “U.S. shareholder” with respect to one or more of our controlled foreign corporation subsidiaries. In addition, if our shares are treated as owned more than 50% by U.S. shareholders, we would be treated as a controlled foreign corporation. A U.S. shareholder of a controlled foreign corporation may be required to annually report and include in its U.S. taxable income, as ordinary income, its pro rata share of “Subpart F income,” “global intangible low-taxed income” and investments in U.S. property by controlled foreign corporations, whether or not we make any distributions to such U.S. shareholder. An individual U.S. shareholder generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a corporate U.S. shareholder with respect to a controlled foreign corporation. A failure by a U.S. shareholder to comply with its reporting obligations may subject the U.S. shareholder to significant monetary penalties and may extend the statute of limitations with respect to the U.S. shareholder’s U.S. federal income tax return for the year for which such reporting was due. We cannot provide any assurances that we will assist investors in determining whether we or any of our non-U.S. subsidiaries are controlled foreign corporations or whether any investor is a U.S. shareholder with respect to any such controlled foreign corporations. We also cannot guarantee that we will furnish to U.S. shareholders information that may be necessary for them to comply with the aforementioned obligations. U.S. investors should consult their own advisors regarding the potential application of these rules to their investments in us. The risk of being subject to increased taxation may deter our current shareholders from increasing their investment in us and others from investing in us, which could impact the demand for, and value of, our shares.
The United States could treat Weatherford International plc (parent corporation) as a United States taxpayer under IRC Section 7874.
Following the emergence from bankruptcy on December 13, 2019, Weatherford continues to operate under Weatherford International plc (“PLC”), an Irish tax resident. The IRS may, however, assert that PLC should be treated as a U.S. corporation for U.S. federal income tax purposes pursuant to IRC Section 7874. For U.S. federal income tax purposes, a corporation generally is classified as either a U.S. corporation or a foreign corporation by reference to the jurisdiction of its organization or incorporation. Because PLC is an Irish incorporated entity, it would generally be classified as a foreign corporation under these rules. IRC Section 7874 provides an exception to this general rule under which a foreign incorporated entity may, in certain circumstances, be treated as a U.S. corporation for U.S. federal income tax purposes. Under IRC Section 7874, a corporation created or organized outside the United States (i.e., a foreign corporation) will nevertheless be treated as a U.S. corporation for U.S. federal income tax purposes when (i) the foreign corporation directly or indirectly acquires substantially all of the assets held directly or indirectly by a U.S. corporation (including the indirect acquisition of assets of the U.S. corporation by acquiring the outstanding shares of the U.S. corporation), (ii) the shareholders of the acquired U.S. corporation hold, by vote or value, at least 80% (or 60% in certain circumstances if the Third Country Rule applies) of the shares of the foreign acquiring corporation after the acquisition by reason of holding shares in the U.S. acquired corporation, and (iii) the foreign corporation’s “expanded affiliated group” does not have substantial business activities in the foreign corporation’s country of organization or incorporation relative to such expanded affiliated group’s worldwide activities. Although it is not free from doubt, we believe that as a result of the implementation of the plan of reorganization in 2019, PLC should not be treated as acquiring directly or indirectly substantially all of the properties of a U.S. corporation and, as a result, PLC is not expected to be treated as a U.S. corporation or otherwise subject to the adverse tax consequences of IRC Section 7874. The law and the Treasury Regulations promulgated under IRC Section 7874 are, however, unclear and there can be no assurance that the IRS will agree with this conclusion. If it is determined that IRC Section 7874 is applicable, PLC would be a U.S. corporation for U.S. federal income tax purposes, the taxable year of Weatherford US
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Table of Contents Item 1A | Risk Factors
consolidated group could end on or prior to the emergence from bankruptcy, which could result in additional adverse tax consequences. In addition, although PLC would be treated as a U.S. corporation for U.S. federal income tax purposes, it would generally also be considered an Irish tax resident for Irish tax and other non-U.S. tax purposes.
The rights of our shareholders are governed by Irish law; Irish law differs from the laws in effect in the United States and may afford less protection to holders of our securities.
As an Irish company, we are governed by the Irish Companies Act, which differs in some material respects from laws generally applicable to U.S. corporations and shareholders, including, among others, provisions relating to interested directors, mergers and acquisitions, takeovers, shareholder lawsuits and indemnification of directors. Likewise, the duties of directors and officers of an Irish company generally are owed to the company only. Shareholders of Irish companies generally do not have a personal right of action against directors or officers of the company and may exercise such rights of action on behalf of the company only in limited circumstances. Accordingly, holders of our securities may have more difficulty protecting their interests than would holders of securities of a corporation incorporated in a jurisdiction of the United States.
We are incorporated in Ireland and a significant portion of our assets are located outside the United States. As a result, it might not be possible for shareholders to enforce civil liability provisions of the federal or state securities laws of the United States.
We are organized under the laws of Ireland, and a significant portion of our assets are located outside the United States. The United States currently does not have a treaty with Ireland providing for the reciprocal recognition and enforcement of judgments in civil and commercial matters. As such, a shareholder who obtains a court judgment based on the civil liability provisions of U.S. federal or state securities laws may be unable to enforce the judgment against us in Ireland. In addition, there is some doubt as to whether the courts of Ireland and other countries would recognize or enforce judgments of U.S. courts obtained against us or our directors or officers based on the civil liabilities provisions of the federal or state securities laws of the United States or would hear actions against us or those persons based on those laws. The laws of Ireland do, however, as a general rule, provide that the judgments of the courts of the United States have the same validity in Ireland as if rendered by Irish Courts. Certain important requirements must be satisfied before the Irish Courts will recognize the U.S. judgment. The originating court must have been a court of competent jurisdiction, the judgment must be final and conclusive, and the judgment may not be recognized if it was obtained by fraud, or its recognition would be contrary to Irish public policy. Any judgment obtained in contravention of the rules of natural justice or that is irreconcilable with an earlier foreign judgment would not be enforced in Ireland.
Similarly, judgments might not be enforceable in countries other than the United States where we have assets.
General Risks
Interruptions in the proper functioning of our information systems or other issues with our enterprise resource systems could cause disruption to our operations.
We rely extensively on our information systems to manage our business, data, communications, supply chain, ordering, pricing, billing, inventory replenishment, accounting functions, and other processes. Our enterprise resource systems are subject to damage or interruption from various sources, including obsolescence, power outages, computer and telecommunications failures, computer viruses, cyber security breaches, vandalism, severe weather conditions, catastrophic events, terrorism, and human error, and our disaster recovery planning cannot account for all eventualities. Our disaster recovery measures may or may not address all potential contingencies. If our systems are damaged, fail to function properly, or otherwise become compromised or unavailable, we may incur substantial costs to repair or replace them, and we may experience loss of critical data or interruptions or delays in our ability to perform critical functions, which could adversely affect our business, operating results, or financial condition.
Furthermore, certain of our information systems are aged and may require periodic modifications, upgrades, and replacements which may subject us to risks, including operating disruptions, substantial capital expenditures, or additional cost to implement new systems. The failure to properly or efficiently modify, upgrade, replace or implement such systems on a timely basis could materially disrupt our operations, and have a material adverse effect on our financial results.
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Table of Contents Item 1A | Risk Factors
If our long-lived assets and other assets are impaired, we may be required to record significant non-cash charges to our earnings.
We recognize impairments of long-lived assets when we determine the carrying amount of certain long-lived asset groups exceed their respective fair values. Our impairment assessment includes analysis of the undiscounted cash flow of our asset groups, which include property, plant, and equipment, definite-lived intangible assets, and operating lease assets. Based on the uncertainty of forecasted revenue, forecasted operating margins, and discount rate assumptions used to estimate our asset groups’ fair value, future reductions in our expected cash flows could cause a material non-cash impairment charge of long-lived assets, which could have a material adverse effect on our business, financial condition, and results of operations.
Item 1B. Unresolved Staff Comments.
None.
Item 1C. Cybersecurity.
Cybersecurity Oversight and Governance
Weatherford is committed to protecting its information systems. These efforts are led by the Chief Information Officer (“CIO”). Our program is designed to align with international best practices used in our industry, such as the Cyber Security Framework from the National Institute of Standards and Technology (“NIST”).
Weatherford’s cybersecurity has been developed by the CIO and the information security team, in coordination with our Board and key members of our finance, assurance and legal teams. The information security team, which has years of experience selecting, deploying, and operating cybersecurity technologies and initiatives around the world, uses a risk-based approach in an effort to facilitate protection, detection and rapid response to threats. We seek to validate our approach through NIST Cyber Security Risk Assessments conducted by third parties and tested through penetration tests and tabletop exercises, as well as internal and external audits.
Information security is a key part of the Company’s Enterprise Risk Management (“ERM”) program, which is designed to identify and evaluate potentially material risks, the potential impact of these risks on the enterprise, as well as steps to control and mitigate those risks. The Company has established an ERM Committee that meets regularly to evaluate risks and coordinate a consistent approach to risk mitigation across the enterprise, including risks related to cybersecurity. The ERM Committee is comprised of certain members of our cross-functional executive leadership team.
The CIO reports quarterly to senior management, including the Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and General Counsel, among others, on the status of company-wide cybersecurity initiatives, risks and other developments. The CIO or key members of the executive leadership team update the audit committee of our Board periodically on the cybersecurity landscape, the status of ongoing initiatives and any threats or other issues. The audit committee has ultimate oversight over the cybersecurity of the organization.
Protection
Employee Awareness and Training
Weatherford offers multilingual training sessions and awareness campaigns to better equip our employees with knowledge and tools to safeguard our information systems. Cybersecurity training occurs during onboarding and refresher courses are taken annually. Weatherford performs simulated phishing campaigns to raise employee awareness and provide guidance on recognizing and reporting potential threats. Employees are encouraged to report on cybersecurity threats, data privacy incidents, or any other concerns.
Weatherford also provides guidance to support employees on acceptable use, remote access, encryption, cloud security, and anti-virus best practices. Weatherford has long included a safety moment at the beginning of major internal meetings, and cyber safety is an occasional topic.
We believe our ongoing training and awareness campaigns reinforce the importance of employees in preventing cybersecurity incidents, and further the goal of continuously promoting Weatherford’s culture of safety, security and compliance.
Protection Systems
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Table of Contents Item 1B through Item 4 | Unresolved Staff Comments through Mine Safety
Weatherford has made significant investments in cyber protection systems, including by engaging third party service providers to actively search and monitor information systems for vulnerabilities through penetration testing and other means. In addition, multi-factor authentication and strong passwords are used across all major Weatherford systems in an effort to prevent unauthorized access.
Weatherford personnel perform risk assessments on third-party products and platforms through a checklist-based review and interview process that aim to validate security controls. Third parties are often asked to provide additional documentation on security architecture, certifications and results of assessments. Cybersecurity approval is a key factor in approving a new third-party product or platform.
Detection and Response
Weatherford uses multiple internal and external resources to continuously monitor our information systems for evidence of a threat, breach or other incident.
When a threat or other issue is identified, the information security team follows an incident response plan that outlines the process for investigating and addressing the issue. The incident response plan is focused on prompt interdisciplinary communication and coordination between the information security team and key members of the finance, legal, and communication teams, as well as senior management. The information security team also utilizes specific runbooks for various types of threats that are updated and expanded based on lessons learned and emerging best practices. Our incident response plan also provides for consideration of whether an incident is material, requiring disclosure to shareholders in SEC filings. Our team also has a disaster recovery plan, under which recovery testing occurs annually.
Weatherford expects to continually invest in the improvement of cybersecurity infrastructure, as systems and needs evolve and as the threat landscape changes. Because we employ a prevention-based improvement cycle that requires the response team for each threat or incident to consider the root cause of the issue and any lessons learned throughout the response process, we strive to make corrections and improvements in our policies and procedures that are designed to safeguard against future threats.
While we believe our approach to cybersecurity is reasonable, given the rapidly evolving nature of cybersecurity incidents, there can be no assurance that the controls we have designed and implemented will be sufficient in preventing future incidents or attacks. See “Item 1A –Risk Factors – Our business could be negatively affected by cybersecurity incidents and other technology disruptions” for more information about cybersecurity risk.
Item 2. Properties.
We conduct business in approximately 75 countries and have manufacturing facilities, research and technology centers, fluids and processing centers and sales, service and distribution locations throughout the world. Our principal executive offices are in Houston, Texas, U.S. We own or lease numerous other facilities such as service centers, shops, sales and administrative offices throughout the geographic regions in which we operate. The major service centers where we support our segment operations are located in Villahermosa, Mexico; Villavicencio, Colombia; Dhahran, Saudi Arabia; Neuquen, Argentina; Abu Dhabi, United Arab Emirates; Mina Abdulla, Kuwait; Williston, North Dakota, U.S.; Nimr, Oman and Odessa, Texas, U.S. We operate research and technology centers in Houston, Texas, U.S.; Loughborough, United Kingdom; and Mumbai, India and have major manufacturing centers in JiangSu, China; Abu Dhabi, United Arab Emirates; Huntsville, Texas, U.S.; Vadodara, India and Hannover, Germany.
All of our material U.S., Canada and United Kingdom properties are mortgaged to the lenders under our 2028 Senior Secured Notes and Credit Agreement. Our remaining owned properties are unencumbered; however, the lenders could require we mortgage certain of these properties as well. We believe the facilities that we currently occupy are suitable for their intended use.
Item 3. Legal Proceedings.
In the ordinary course of business, we are the subject of various claims and litigation. We maintain insurance to cover many of our potential losses, and we are subject to various self-retention limits and deductibles with respect to our insurance. Please see the following:
•If we are the subject of governmental and internal investigations related to alleged misconduct and violations of U.S. or international laws in the future, it could have a material adverse effect on our business, financial condition and results of operations. For additional information, see Item 1A. Risk Factors- Legal, Tax and Regulatory Risks.
•See also “Item 1. - Business” and “Item 8. – Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 12 – Disputes, Litigation and Legal Contingencies.”
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It is possible 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.
Item 4. Mine Safety Disclosures.
Not applicable.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
On June 1, 2021, NASDAQ approved our application for the listing of our ordinary shares and we became subject to the reporting requirements of the Securities Exchange Act of 1934 (as amended, the “Exchange Act”). Our ordinary shares began trading on the Nasdaq Global Select Market on June 2, 2021 under the ticker symbol “WFRD”. As of February 1, 2024, we had 68 shareholders of record. The actual number of shareholders is considerably greater than the number of shareholders of record and includes shareholders who are beneficial owners but whose shares are held in street name by brokers and other nominees.
During the three months ended December 31, 2023, we issued 3,429 ordinary shares upon the exercise of outstanding warrants, resulting in cash proceeds to the Company of $342,763. The ordinary shares were issued pursuant to an exemption from registration under Section 1145 of the Bankruptcy Code. On December 13, 2023, the remaining 7,774,134 unexercised warrants expired, and the rights of the warrant holders to purchase ordinary shares were terminated.
We intend to retain future earnings to reinvest in our business and/or to repay debt, and the declaration and payment of future dividends and/or other forms of shareholder returns will be at the discretion of the Board and will depend, among other things, on future earnings, general financial condition and liquidity restrictions contained in our financing agreements, capital requirements and general business conditions, in addition to legal requirements.
The following graph shows a comparison of cumulative total shareholder return on our ordinary shares, the Dow Jones U.S. Index (“DJI”), the Dow Jones U.S. Oil Equipment and Services Index (“DJUSOI”), the Philadelphia Oil Service Index (“OSX”), the VanEck Oil Services ETF (“OIH”) and the Standard & Poor’s 500 Index (“S&P 500”) from June 2, 2021 (date we began trading on NASDAQ) through 2023. During 2023, we elected to include OSX, OIH, and S&P 500 as these either: represent a group of our competitors, is an index in which we are a component of or is an index in which we and our peers benchmark against. The graph assumes $100 was invested in each of the Company’s ordinary shares, and aforementioned indices. Note that past stock price performance is not necessarily indicative of future stock price performance.
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Table of Contents Item 7 | MD&A
| 06/02/21 | 12/31/21 | 12/31/22 | 12/31/23 | |||||||||||
| Weatherford International plc | $100 | $216 | $398 | $764 | ||||||||||
| Dow Jones U.S. Oil Equipment and Services Index | $100 | $95 | $130 | $135 | ||||||||||
| Dow Jones U.S. Index | $100 | $105 | $96 | $109 | ||||||||||
Philadelphia Oil Service Index | $100 | $82 | $131 | $131 | ||||||||||
VanEck Oil Services ETF | $100 | $83 | $136 | $139 | ||||||||||
Standard & Poor’s 500 Index | $100 | $113 | $91 | $114 | ||||||||||
Weatherford International plc – 2023 Form 10-K | 25
Item 6. [Reserved]
Item 7. 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 earlier section “Item 1. Business” and our Consolidated Financial Statements and Notes thereto included later in “Item 8. Financial Statements and Supplementary Data.” Our discussion includes various forward-looking statements about our markets, the demand for our products and services and our future results. These statements include certain risks and uncertainties. For information about these risks and uncertainties, refer to the section entitled “Forward-Looking Statements” and the section entitled “Item 1A. Risk Factors.”
Industry Trends
Demand for our industry’s products and services is driven by many factors, including commodity prices, the number of oil and gas rigs and wells drilled, depth and drilling conditions of wells, number of well completions, age of existing wells, reservoir depletion, regulatory environment, and the level of workover activity worldwide.
Lower oil and natural gas prices and lower rig count generally correlate to lower exploration and production spending, and higher oil and natural gas prices and higher rig count generally correlate to higher exploration and production spending. Therefore, our financial results are significantly affected by oil and natural gas prices as well as rig counts.
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 (“HH”) natural gas.
| Year Ended December 31, | ||||||||||||||
| 2023 | 2022 | 2021 | ||||||||||||
Oil price - WTI (1) | $ | 77.64 | $ | 94.79 | $ | 67.99 | ||||||||
Oil price - Brent (1) | $ | 82.47 | $ | 100.78 | $ | 70.68 | ||||||||
Natural Gas price - HH (2) | $ | 2.54 | $ | 6.42 | $ | 3.91 | ||||||||
(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 | ||||||||||||||
The table below shows historical average rig counts based on the weekly Baker Hughes Company rig count information.
| Year Ended December 31, | ||||||||||||||
| 2023 | 2022 | 2021 | ||||||||||||
| North America | 864 | 898 | 610 | |||||||||||
| International | 948 | 851 | 755 | |||||||||||
| Worldwide | 1,812 | 1,749 | 1,365 | |||||||||||
Consolidated Statements of Operations - Operating Income Summary
2023 vs 2022
Revenues totaled $5.14 billion in 2023, an increase of $804 million, or 19% compared to 2022. The year-over-year improvement was due to increased activity across all reporting segments. Customer demand is primarily driven by changes in oil and natural gas prices and rig counts. Revenues in 2023 reflect a 18% increase in service revenues and a 20% increase in product revenues. WCC, DRE, and PRI contributed to 35%, 26%, and 10% of the increase in revenues, respectively, with the remainder from higher activity in integrated services and projects. Geographically, growth in 2023 was led by improvements in the Middle East/North Africa/Asia, Latin America and Europe/Sub-Sahara Africa/Russia, which contributed to 51%, 40%, and 13% of the increase, respectively, partly offset by a revenue decline in North America. Approximately 80% of our revenue increase in 2023 was due to increased customer demand, with the remainder from pricing and market share improvements, and operational focus. Average oil prices in 2023 decreased 18% for both West Texas Intermediate crude oil and Brent North Sea crude oil compared to
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Table of Contents Item 7 | MD&A
2022. Henry Hub natural gas prices decreased 60% compared to 2022. Global rig counts increased 4% compared to 2022. International revenues (outside of North America, see “Note 3 – Revenue” to our Consolidated Financial Statements) led the increase in 2023, observable in the 11% increase of international rig counts for the same periods.
Cost of products and services of $3.40 billion increased $375 million, or 12%, in 2023 compared to 2022, to support the increased overall activity across our segments. Approximately 80% of our increase in 2023 was attributable to cost increases necessary to meet increased demand, with a large portion of the remainder from a shift in service and product mix and the rest due to inflation in the cost of labor and materials. Our cost of products and services as a percentage of revenues was 66% in 2023, an improvement compared to 70% in 2022, reflecting improved utilization on a more efficient operating cost structure, and pricing improvements to customers to offset impacts from supply chain disruptions and inflation. Additionally, lower inventory charges contributed to the lower cost structure as a percentage of revenues.
Selling, general, administrative and research and development costs of $916 million increased $48 million, or 6%. The increase primarily reflects an increase in research and development investment in newer technologies and an increase in overhead to support organization growth. These costs as a percentage of revenues were 18% in 2023, an improvement compared to 20% in 2022, reflecting our focus on cost control initiatives.
2022 vs 2021
Revenues totaled $4.33 billion in 2022, an increase of $686 million, or 19% compared to 2021. The year-over-year improvement was due to increased activity across all reporting segments. Revenues in 2022 reflect a 15% increase in service revenues and a 26% increase in product revenues. The year-over-year improvement was due to increased activity across all reporting segments with PRI, DRE and WCC contributing 39%, 38%, and 24% of the increase in revenues, respectively. Geographically, growth in 2022 was led by improvements in Latin America, the Middle East/North Africa/Asia, and North America, which contributed to 36%, 30%, and 30% of the increase, respectively. Approximately 70% of our revenue increase in 2022 was due to increased customer demand with remainder from pricing and market share improvements, and operational focus. Customer demand is primarily driven by changes in oil and natural gas prices and rig counts. Average oil prices in 2022 increased 39% for West Texas Intermediate crude oil and 43% for Brent North Sea crude oil compared to 2021. Henry Hub natural gas prices increased 64% compared to 2021. Global rig counts increased 28% compared to 2021. Service and product quality excellence allowed us to benefit from a robust market with customers focusing on delivering energy supply with minimal disruption, globally. Imbalance across geographies driven by geopolitical conflicts, investment variances and supply disruptions caused a greater focus on energy security, globally. Our operational initiatives, put in place over the past couple of years, enabled us to regain share in a few product lines and geographies, as well as improve pricing through differentiation.
Cost of products and services of $3.02 billion increased $304 million, or 11% compared to 2021, to support the increased overall activity across our segments. Approximately 70% of this increase is attributable to cost increases necessary to meet increased demand for our products and services. The remainder of the increase was primarily due to inflation of wages and to a lesser extent higher cost of materials. Our cost of products and services as a percentage of revenues was 70% in 2022, an improvement compared to 75% in 2021, reflecting improved utilization on a more efficient operating cost structure, and pricing improvements to customers to offset impacts from supply chain disruptions and inflation. Additionally, higher gains on asset sales and lower inventory charges contributed to the lower cost structure as a percentage of revenues.
Selling, general, administrative and research and development costs in 2022 of $868 million increased $45 million, or 5%, when compared to 2021 to keep up with increased activity and demand across our segments. These costs as a percentage of revenues were 20% in 2022, an improvement compared to 23% in 2021, reflecting our focus on cost control initiatives.
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Table of Contents Item 7 | MD&A
Consolidated Statements of Operations - Non-Operating Summary
Interest Expense, Net
Interest expense, net primarily represented for each year, the interest on our outstanding long-term debt (see “Note 8 – Borrowings and Other Debt Obligations” to our Consolidated Financial Statements for additional details) offset by interest income. Interest expense, net, of $123 million in 2023, decreased $56 million, or 31%, compared to 2022 primarily due to the early repayments of principal on our 11.00% Exit Notes maturing on December 1, 2024, fully repaid in 2023, early repayments and repurchases of principal on our 6.5% Senior Secured Notes maturing September 15, 2028, and an increase in interest income. Interest expense, net, of $179 million in 2022, decreased $81 million, or 31%, compared to $260 million in 2021 primarily due to the early repayments of principal amounts on our 11.00% Exit Notes maturing on December 1, 2024, having fully repaid in 2021 on our 8.75% Senior Secured Notes maturing on September 1, 2024, and an increase in interest income.
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 operations in Argentina. During the second quarter of 2023, we entered into a series of BCS securities transactions that resulted in a “Loss on Blue Chip Swap Securities” of $57 million. See “Note 17 – Blue Chip Swap Securities - Argentina” to our Consolidated Financial Statements for additional details.
Loss on Extinguishment of Debt and Bond Redemption Premium
During 2023, we repaid the remaining $125 million in principal on our Exit Notes and made $243 million in repayments and repurchases of our 6.5% Senior Secured Notes, and incurred a $5 million bond redemption premium. During 2022, we repaid $175 million in principal on our Exit Notes and incurred a $5 million bond redemption premium. During 2021, we repaid in full our 2024 Senior Secured Notes, repaid $200 million of Exit Notes, and refinanced $1.6 billion of Exit Notes. As such, we recognized a $170 million loss, comprised of a $39 million loss on extinguishment of debt and a $131 million bond redemption premium. See “Note 8 – Borrowings and Other Debt Obligations” for additional details.
Other Expense, Net
Other expense, net, of $129 million in 2023 increased $39 million compared to 2022 expense of $90 million primarily attributable to currency losses on the Argentine Peso. Other expense, net, in 2022 increased by $61 million compared to the 2021 expense of $29 million primarily attributable to currency losses in the Argentine Peso and the Russian Ruble.
When economically advantageous, we enter into foreign currency forward contracts to mitigate the risk of future cash flows denominated in a foreign currency. Additionally, we enter into certain short-term investments which partially offset these foreign exchange losses.
Income Taxes
We provide for income taxes based on the laws and rates in effect in the countries in which operations are conducted, or in which we or our subsidiaries are considered resident for income tax purposes. The relationship between our pre-tax income or loss 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 unable to recognize tax benefit on certain losses.
We record deferred tax assets for net operating losses and temporary differences between the book and tax basis of assets and liabilities that are expected to produce tax deductions in future periods. The realizability of the deferred tax assets is dependent upon judgments and assumptions inherent in the determination of future taxable income, including factors such as future operating conditions (particularly as related to prevailing oil prices and market demand for our products and services). The Company concluded it was not able to realize the benefit of certain deferred tax assets and has established a valuation allowance. Continued performance improvement in certain jurisdictions could result in a change in our realization of deferred tax asset assessment in the near future, which would release valuation allowance.
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Table of Contents Item 7 | MD&A
The income tax provision and respective effective tax rate was $57 million and 11%, $87 million and 63%, and $86 million and (25)% for 2023, 2022 and 2021, respectively.
Our income tax provisions in 2023 and 2022 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. Impairments and other charges recognized do not result in significant tax benefit as a result of being attributed to a non-income tax jurisdiction or our inability to forecast realization of the tax benefit of such losses.
For the year ended December 31, 2023, income tax expense was lower by $93 million, due to the release of valuation allowances where deferred tax assets are now considered more likely than not to be realized in the future, and $22 million due to the recognition of a benefit from previously uncertain tax positions throughout the year. Those benefits were offset by the establishment of valuation allowance of approximately $50 million against the sale of Blue Chip Swap securities and currency devaluation in Argentina (see Note 17 – Blue Chip Swap Securities - Argentina). During the year ended December 31, 2022, income tax expense was lower by $35 million, due to the release of valuation allowances and $27 million, due to the recognition of a benefit from previously uncertain tax positions.
We are continuously under 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 consolidated financial statements. As of December 31, 2023, we anticipate that it is reasonably possible that the amount of our uncertain tax positions of $203 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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Results of Operations by Segment
| Favorable | Favorable | ||||||||||||||||||||||||||||
| (Unfavorable) | (Unfavorable) | ||||||||||||||||||||||||||||
| Year Ended December 31, | $ | % or bps | $ | % or bps | |||||||||||||||||||||||||
| (Dollars in millions) | 2023 | 2022 | 2021 | 2023 vs 2022 | 2022 vs 2021 | ||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||
| DRE Revenues | $ | 1,536 | $ | 1,328 | $ | 1,066 | $ | 208 | 16% | $ | 262 | 25% | |||||||||||||||||
| WCC Revenues | 1,800 | 1,521 | 1,353 | 279 | 18% | 168 | 12% | ||||||||||||||||||||||
| PRI Revenues | 1,472 | 1,395 | 1,127 | 77 | 6% | 268 | 24% | ||||||||||||||||||||||
| All Other | 327 | 87 | 99 | 240 | 276% | (12) | (12)% | ||||||||||||||||||||||
| Total Revenues | 5,135 | 4,331 | 3,645 | 804 | 19% | 686 | 19% | ||||||||||||||||||||||
| Operating Income: | |||||||||||||||||||||||||||||
| DRE Segment Adjusted EBITDA | $ | 422 | $ | 324 | $ | 186 | $ | 98 | 30% | $ | 138 | 74% | |||||||||||||||||
| WCC Segment Adjusted EBITDA | 455 | 299 | 256 | 156 | 52% | 43 | 17% | ||||||||||||||||||||||
| PRI Segment Adjusted EBITDA | 323 | 261 | 191 | 62 | 24% | 70 | 37% | ||||||||||||||||||||||
All Other | 38 | 1 | 6 | 37 | 3700% | (5) | (83)% | ||||||||||||||||||||||
Corporate | (52) | (68) | (68) | 16 | 24% | — | —% | ||||||||||||||||||||||
| Depreciation and Amortization | (327) | (349) | (440) | 22 | 6% | 91 | 21% | ||||||||||||||||||||||
Share-based Compensation | (35) | (25) | (25) | (10) | (40)% | — | —% | ||||||||||||||||||||||
Other Credits (Charges) | (4) | (31) | 10 | 27 | 87% | (41) | (410)% | ||||||||||||||||||||||
| Operating Income (Loss) | $ | 820 | $ | 412 | $ | 116 | $ | 408 | 99% | $ | 296 | 255% | |||||||||||||||||
| Margins: | |||||||||||||||||||||||||||||
| DRE Segment Adjusted EBITDA Margin | 27.5 | % | 24.4 | % | 17.4 | % | n/m | 308 | bps | n/m | 695 | bps | |||||||||||||||||
| WCC Segment Adjusted EBITDA Margin | 25.3 | % | 19.7 | % | 18.9 | % | n/m | 562 | bps | n/m | 74 | bps | |||||||||||||||||
| PRI Segment Adjusted EBITDA Margin | 21.9 | % | 18.7 | % | 16.9 | % | n/m | 323 | bps | n/m | 176 | bps | |||||||||||||||||
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DRE Results
2023 vs 2022
DRE revenues of $1.5 billion in 2023 increased by $208 million or 16% compared to 2022 due to higher demand and activity with approximately 70% of the increase from drilling-related services. Geographically, approximately 55% of the overall revenue growth came from Latin America and approximately 25% from the Middle East/North Africa/Asia regions.
DRE segment adjusted EBITDA of $422 million in 2023 increased by $98 million or 30% compared to 2022. DRE segment adjusted EBITDA margin was 27.5% in 2023 compared to 24.4% in 2022.
2022 vs 2021
DRE revenues of $1.3 billion in 2022, increased by $262 million or 25% compared to 2021 due to higher demand and activity with approximately 70% of the increase from managed pressure drilling and drilling services. Geographically, approximately half of the overall revenue growth came from Latin America and 35% from the Middle East/North Africa/Asia regions.
DRE segment adjusted EBITDA of $324 million in 2022 increased by $138 million or 74% compared to 2021. DRE segment adjusted EBITDA margin was 24.4% in 2022 compared to 17.4% in 2021.
WCC Results
2023 vs 2022
WCC revenues of $1.8 billion in 2023 increased by $279 million or 18% compared to 2022 due to higher demand and activity with approximately 75% of the increase from completions and cementation products. Geographically, international regions contributed to approximately all of the overall revenue growth with 50% from the Middle East/North Africa/Asia. Latin America along with Europe/Sub-Sahara Africa/Russia equally contributed to the remaining overall revenue growth.
WCC segment adjusted EBITDA of $455 million in 2023 increased by $156 million or 52% compared to 2022. WCC segment adjusted EBITDA margin was 25.3% in 2023 compared to 19.7% in 2022.
2022 vs 2021
WCC revenues of $1.5 billion in 2022 increased by $168 million or 12% compared to 2021 due to higher demand and activity with approximately 55% of the increase from cementation products. Geographically, approximately half of the overall revenue growth came from the Middle East/North Africa/Asia with North America and Latin America contributing equally to remaining overall revenue growth. The increase was offset by a revenue decline in Europe/Sub-Sahara Africa/Russia.
WCC segment adjusted EBITDA of $299 million in 2022 increased by $43 million or 17% compared to 2021. WCC segment adjusted EBITDA margin was 19.7% in 2022 compared to 18.9% in 2021.
PRI Results
2023 vs 2022
PRI revenues of $1.5 billion in 2023 increased by $77 million or 6% compared to 2022 due to higher demand and activity with approximately 75% of the increase from pressure pumping and intervention services and drilling tools. Geographically, international regions contributed approximately all of the overall revenue growth with approximately half from Latin America and half from the Middle East/North Africa/Asia. The increase was offset by a revenue decline in North America.
PRI segment adjusted EBITDA of $323 million in 2023 increased by $62 million or 24% compared to 2022. PRI segment adjusted EBITDA margin was 21.9% in 2023 compared to 18.7% in 2022.
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2022 vs 2021
PRI revenues of $1.4 billion in 2022, increased by $268 million or 24% compared to 2021 due to higher demand and activity across all PRI product lines with approximately 75% of the increase from artificial lift and pressure pumping. Geographically, approximately 45% of the revenue growth came from North America and approximately 45% of the growth was contributed equally by Europe/Sub-Sahara Africa/Russia and Latin America.
PRI segment adjusted EBITDA of $261 million in 2022 increased by $70 million or 37% compared to 2021. PRI segment adjusted EBITDA margin was 18.7% in 2022 compared to 16.9% in 2021.
All Other Results
All other includes results from non-core business activities that do not individually meet the criteria for segment reporting, including integrated services and projects, which includes pass through services and project management services.
All other revenues of $327 million, increased $240 million or 276%, in 2023 compared to 2022, primarily due to higher activity related to integrated services and projects in the Middle East/North Africa/Asia and Latin America. All other revenues of $87 million, decreased $12 million or 12% in 2022 compared to 2021, primarily due to product line discontinuations and lower revenues from integrated services and projects.
Corporate
Corporate was a net expense of $52 million in 2023, a decrease of $16 million or 24% compared to 2022, primarily due to lower litigation expense in 2023. Corporate was a net expense of $68 million in 2022 and 2021 and included the impact of litigation expense or other one-time items.
Depreciation and Amortization
Depreciation and amortization expense in 2023 was $327 million, a decrease of $22 million compared to 2022, and in 2022 was $349 million, a decrease of $91 million compared to 2021. The decrease in both periods was primarily attributed to a lower asset base, offset by an increase in our capital expenditures as demand increased. See “Note 2 – Segment Information”, “Note 7 – Property, Plant and Equipment, Net”, and “Note 8 – Intangible Assets, Net” for additional information.
Share-based Compensation
We record share-based compensation expense in “Selling, General and Administrative” on the accompanying Consolidated Statements of Operations. We recognized $35 million in 2023 and $25 million in each of 2022, and 2021. The increase was primarily attributable to the cost of performance share units. See “Note 13 – Share-Based Compensation” for additional information.
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Outlook
Growth and spending in the energy services industry is highly dependent on many external factors. These include but are not limited to; the impact from geopolitical conflicts; global response to any ongoing pandemics; our customers’ capital expenditures; environmental, social and governance and other sustainability initiatives; world economic, political and weather conditions; the price of oil and natural gas; and, member-country quota compliance within the Organization of Petroleum Exporting Countries and the expanded alliance. Imbalance across geographies driven by geopolitical conflicts, investment variances and supply disruptions are driving a greater focus on energy security, which in turn is creating a shift towards national oil companies. We expect continued improvements in our customer activity levels and generally positive macroeconomic conditions, all of which are expected to continue to provide a pathway to a multi-year energy demand expansion. We continue to closely monitor macroeconomic conditions, potential supply chain disruptions, inflationary factors, and other labor and logistical constraints that could impact our operations and results.
Our customers continue to face challenges in balancing the cost of extraction activities with securing desired rates of production while achieving acceptable rates of return on investment. These challenges increase our customers’ requirements for technologies that improve productivity and efficiency and pressure us to deliver our products and services at competitive rates. Over the long-term, we expect demand for oil and natural gas exploration and production industry as well as new energy platforms to continue to require more advanced technology from the energy service industry. Weatherford delivers innovative energy services that integrate proven technologies with advanced digitalization to create sustainable offerings for maximized value and return on investment. There was substantial negative impact on the global economy and demand leftover in 2021 from the COVID-19 pandemic, which carried at a lesser extent into 2022 which also included inflationary pressures, logistical delays and service and supply shortages. We managed to face these challenges by evolving our offerings, increasing the breadth of our digital portfolio and enhancing our applications to offer more fully integrated digital energy services solutions. We also increased our offerings of automated well construction and remote monitoring and predictive analytics related to our product offerings. Our resiliency continued to show in our performance through 2023, allowing us to also make improvements on our capital structure through debt reduction. We believe we are well positioned to satisfy our customers’ needs, but the level of improvement in our businesses in the future will continue to depend heavily on pricing, volume of work, our ability to offer cost efficient, innovative and effective technology solutions, and our success in gaining market share in new and existing markets.
Our company performance, industry conditions and related perception, could make it more difficult to obtain our targeted cost reduction benefits and to recruit, motivate and retain employees, including key personnel. The implementation of new or escalation of existing sanctions imposed against countries in which we operate, including any further escalation of sanctions and other events around the Russia Ukraine Conflict, including increased exposure to cyberattacks, increasing investor and government focus on sustainability initiatives, supply chain challenges and disruptions, and the cyclicality of the energy industry may negatively impact demand for our products and services. The Russia Ukraine Conflict, or other future geopolitical conflicts, could also have the effect of heightening many other risks disclosed in our public filings, any of which could materially and adversely affect our business, financial condition, and results of operations. Such risks include, but are not limited to, adverse effects on global macroeconomic conditions; increased volatility in the price and demand of oil and natural gas, increased exposure to cyberattacks; limitations in our ability to implement and execute our business strategy; risks to employees and contractors that we have in the region; disruptions in global supply chains; exposure to foreign currency fluctuations; potential nationalizations and assets seizures in Russia or elsewhere; constraints or disruption in the capital markets and our sources of liquidity; our potential inability to service our remaining performance obligations and potential contractual breaches and litigation.
We continue to follow our long-term strategy, aimed at achieving sustainable profitability and cash flow generation in our businesses, servicing our customers and creating value for our shareholders. Our long-term success will be determined by our ability to effectively manage the cyclicality of our industry, including growth during up-cycles and potential prolonged industry downturns, our ability to respond to industry changes and demands, while managing through risks we may be exposed to, and ultimately our ability to generate consistent positive cash flow and positive returns on invested capital.
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Liquidity and Capital Resources
At December 31, 2023, we had cash and cash equivalents of $958 million and $105 million in restricted cash, compared to $910 million of cash and cash equivalents and $202 million of restricted cash at December 31, 2022. The following table summarizes cash provided by (used in) each type of business activity in the periods presented:
| Year Ended December 31, | |||||||||||
| (Dollars in millions) | 2023 | 2022 | 2021 | ||||||||
| Net Cash Provided by Operating Activities | $ | 832 | $ | 349 | $ | 322 | |||||
| Net Cash Used in Investing Activities | (289) | (54) | (83) | ||||||||
| Net Cash Used in Financing Activities | (514) | (248) | (403) | ||||||||
Operating Activities
The primary source of cash provided by operating activities was attributed to operating income and collections, which offset operating spend, including cash interest.
Cash provided by operating activities in 2023 was $832 million. Heightened collections activity attributed to the increase year-over-year. During the fourth quarter of 2023, we entered into a credit default swap with a third-party financial institution related to a secured loan between that third-party financial institution and our largest customer in Mexico. The secured loan was utilized by this customer to pay us $140 million of certain of our outstanding receivables, increasing our net cash provided by operating activities. See further discussion below under “Derivative Financial Instruments” and in “Note 10 – Derivative Financial Instruments”.
Cash provided by operating activities was $349 million in 2022 and $322 million in 2021. The primary sources of cash from operating activities were from higher operating income as well as effective working capital management, partially offset by interest payments.
Investing Activities
Cash used in investing activities in 2023 was $289 million. The primary uses of cash in investing activities were for capital expenditures of $209 million, the purchase of Blue Chip Swap securities in Argentina for $110 million (see Note 17 – Blue Chip Swap Securities - Argentina), and $51 million of other investing activities. The uses of cash were offset by Blue Chip Swap proceeds of $53 million and $28 million in proceeds from the disposition of assets.
Cash used in investing activities in 2022 was $54 million. The primary uses of cash in investing activities were for capital expenditures of $132 million, partially offset by proceeds from the sale of assets of $82 million.
Cash used in investing activities in 2021 was $83 million. The primary uses of cash in investing activities were for capital expenditures of $85 million and investments in marketable securities in Argentina of $39 million. The primary source of cash from investing activities was $41 million of proceeds from asset dispositions.
Financing Activities
Cash used in financing activities in 2023 was $514 million. The primary uses of cash in financing activities were for repayments and repurchases of long-term debt of $386 million (see “Note 8 – Borrowings and Other Debt Obligations”) and $56 million in tax remittances on equity awards vested. The tax remittances were higher than the same period of the prior year due to an increase in both the share price and the quantity of shares vested. Additionally, we paid distributions to noncontrolling interests of $52 million. The remaining financing cash uses were primarily for financing fees paid on the Credit Agreement.
Cash used in financing activities in 2022 was $248 million. The primary uses of cash in financing activities were repayments of long-term debt of $198 million which included finance leases, a repurchase of $8 million of our 2028 Senior Secured Notes and a $175 million early redemption of our Exit Notes. Additionally, we paid distributions to noncontrolling interests of $30 million. The remaining financing cash uses were primarily for financing fees paid on the Credit Agreement.
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Cash used in financing activities in 2021 was $403 million. The primary uses of cash in financing activities were repayments of long-term debt of $2.3 billion associated with the partial redemption of our Exit Notes and full redemption of our 2024 Senior Secured Notes as well as finance lease obligations. Other primary uses of cash from financing activities were $131 million in bond redemption premium payments as a result of the early redemptions and $28 million, primarily for $21 million in distributions to noncontrolling interests that were settled in cash (as certain distributions in the year were settled in other noncash methods). The primary sources of cash from financing activities were net proceeds of $2.1 billion from the issuance of our 2030 Senior Notes and 2028 Senior Secured Notes.
Sources of Liquidity
Our sources of available liquidity include cash generated by our operations, cash and cash equivalent balances, and periodic accounts receivable factoring. From time to time, we may enter into transactions to dispose of businesses or capital assets that no longer fit our long-term strategy. We historically have accessed banks for short-term loans and the capital markets for debt and equity offerings. Based upon current and anticipated levels of operations and our recent refinancing transactions, we expect to have sufficient cash from operations and cash on hand to fund our cash requirements (discussed below) and financial obligations, both in the short-term and long-term.
Cash Requirements
Our cash requirements will continue to include payments for principal and interest on our long-term debt, capital expenditures, payments on our finance and operating leases, payments for short-term working capital needs, operating costs and restructuring payments. As business activity continues to rise, we expect to continue to utilize cash on capital assets and working capital growth. Our cash requirements also include personnel costs including awards under our employee incentive programs and other amounts to settle litigation related matters. In addition, we have derivative financial instruments where we have notional amounts that do not generally represent cash amounts exchanged by the parties and are calculated based on the terms of the derivative instrument, however, in the event of a related default, we could potentially be required to pay. See further discussion below under “Derivative Financial Instruments” and in “Note 10 – Derivative Financial Instruments”.
As of December 31, 2023, we had outstanding debt of $248 million in aggregate principal amount for our 2028 Senior Secured Notes and $1.6 billion in aggregate principal amount for our 2030 Senior Notes. After the January 2024 repurchases of our 2028 Senior Secured Notes, we expect $144 million in interest payments annually in 2024 and each year thereafter until the maturity of our 2028 Senior Secured Notes and 2030 Senior Notes. See “Note 8 – Borrowings and Other Debt Obligations” for additional information.
We have laid out a plan that envisions a capital spend that is 3-5% of revenue over a 12 to 18 months rolling period and our 2024 capital spend is projected to fall within the same framework. Our payments on our operating and finance leases in 2024 are expected to be approximately $79 million and $254 million in the years thereafter. See “Note 7 – Leases” for additional information.
Cash and cash equivalents and restricted cash are held by subsidiaries outside of Ireland. At December 31, 2023 we had approximately $92 million of our cash and cash equivalents that cannot be immediately repatriated from various countries due to country central bank controls or other regulations. Repatriation of those cash balances might result in incremental taxes or losses similar to the Argentine Blue Chip Swap “BCS” transactions executed in 2023 (see “Note 17 – Blue Chip Swap Securities - Argentina”), which may contribute to a decrease in cash and cash equivalents that cannot be immediately repatriated. As we continue to conduct business in Argentina and in other countries with cash that cannot be immediately repatriated, we may consider infrequent transactions like the BCS transaction in the future to safeguard our cash from exposure to the effects of inflation and currency devaluation.
Ratings Services’ Credit Ratings
Our credit ratings at December 31, 2023 were upgraded, maintained, or newly initiated since December 31, 2022 as follows:
•Standard and Poor (“S&P”) upgraded our issuer credit rating from ‘B’ to ‘B+’. The outlook was upgraded from stable to positive.
•Moody's Investors Service (Moody's) maintained all ratings since December 31, 2022 with the exception of an upgrade to its Corporate Family Rating to B1 from B2. The outlook was upgraded from stable to positive.
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•Fitch Ratings (“Fitch”) initiated a credit rating of ‘B+’ with Stable Outlook.
Customer Receivables
We may experience delayed customer payments and payment defaults due to, among other reasons, a weaker economic environment, reductions in our customers’ cash flow from operations, our customers’ inability to access credit markets, as well as unsettled political conditions. Allowances have been recorded for receivables believed to be uncollectible, including amounts for the resolution of potential credit and other collection issues such as disputed invoices. Adjustments to the allowance are made depending on how potential issues are resolved and the financial condition of our customers. See “Note 1 – Summary of Significant Accounting Policies” and “Item 1A. Risk Factors” for additional information. In addition, our customers are primarily in fossil fuel-related industries and broad declines might impact the collections of our customer receivables.
Accounts Receivable Factoring and Monetization
From time to time, we participate in factoring arrangements to sell accounts receivable to third-party financial institutions for cash proceeds net of discount and hold-back. During 2023, 2022, and 2021 we sold accounts receivable balances of $210 million, $96 million, and $100 million, respectively, and received cash proceeds of $202 million, $93 million, and $85 million, respectively, at the time of factoring. During 2022, we also entered into a short-term monetization transaction on accounts receivable balances of $77 million and received cash proceeds of $75 million. These factoring and monetization proceeds are included as operating cash flows in our Consolidated Statements of Cash Flows.
Derivative Financial Instruments
We enter into foreign currency forward contracts to mitigate the risk of future cash flows denominated in a foreign currency. The amounts will fluctuate, depending on exchange rate volatility, the volume of our foreign currency transactions, and our decisions to hedge. During the fourth quarter of 2023, we entered into a credit default swap, further described below. The notional amounts of our foreign currency forward contracts and the credit default swap do not generally represent cash amounts exchanged by the parties and are calculated based on the terms of the derivative instrument. See also “Note 10 – Derivative Financial Instruments” for additional information.
Credit Default Swap
During the fourth quarter of 2023, we entered into a credit default swap (“CDS”) with a third-party financial institution terminating in February of 2026 related to a secured loan between that third-party financial institution and our largest customer in Mexico. The secured loan was utilized by this customer to pay certain of our outstanding receivables and accordingly, in the fourth quarter of 2023 and January of 2024, we received $140 million and $142 million, respectively.
Under the CDS terms, within five business days upon notification of default, we could be required to pay the then outstanding notional balance net of recoveries. As of December 31, 2023, we had a notional balance of $130 million outstanding under the CDS, which increased to $260 million in January of 2024, following the receipt of the $142 million payment. Management expects the total notional balance under the CDS to decrease to $161 million, $54 million and nil by December 31, 2024, December 31, 2025 and March 31, 2026, respectively. The fair value of this derivative was not material as of December 31, 2023.
As of the date of this report, we are not aware of any events of default under the loan agreement between that third-party financial institution and our largest customer in Mexico.
Guarantees
Our Exit Notes and 2028 Senior Secured Notes were issued by Weatherford International Ltd., a Bermuda exempted company (“Weatherford Bermuda”), and guaranteed by the Company and Weatherford International, LLC, a Delaware limited liability company (“Weatherford Delaware”) and other subsidiary guarantors party thereto. Our Exit Notes were fully repaid in 2023.
Our 2030 Senior Notes were originally issued by Weatherford Bermuda and guaranteed by the Company and Weatherford Delaware and other subsidiary guarantors party thereto. On December 1, 2022, the indenture related to our 2030 Senior Notes was amended and supplemented to add Weatherford Delaware as co-issuer and co-obligor, and concurrently releases the guarantee of Weatherford Delaware.
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Credit Agreement, Letters of Credit and Surety Bonds
Weatherford Bermuda, Weatherford Delaware, Weatherford Canada Ltd. (“Weatherford Canada”) and WOFS International Finance GmbH (“Weatherford Switzerland”), together as borrowers, and the Company as parent, have an amended and restated credit agreement (the “Credit Agreement”). The Credit Agreement is guaranteed by the Company and certain of our subsidiaries and secured by substantially all of the personal property of the Company and those subsidiaries. At December 31, 2023, the Credit Agreement allowed for a total commitment amount of $550 million, maturing on the earlier of October 24, 2028 and 91 days prior to the maturity of the 2028 Senior Secured Notes. Financial covenants in the Credit Agreement include a $250 million minimum liquidity covenant (which may increase up to $400 million dependent on the nature of transactions we may decide to enter into), a minimum interest coverage ratio of 2.50 to 1.00, a maximum total net leverage ratio of 3.50 to 1.00, and a maximum secured net leverage ratio of 1.50 to 1.00.
On March 24, 2023, we amended the Credit Agreement to permit unlimited prepayments and other redemptions of indebtedness subject to (i) the ratio of funded debt (net of unrestricted cash in excess of $400 million) to consolidated adjusted EBITDA as defined in the Credit Agreement, not exceeding 2.50 to 1.00, (ii) no default or event of default existing and (iii) aggregate proforma liquidity in the event of a debt reduction equaling or exceeding $300 million.
On October 24, 2023, we amended the Credit Agreement to, among other things, (i) allow for an increase in total commitment amount from $400 million to $550 million ($250 million for performance letters of credit and $300 million for either borrowings or additional performance or financial letters of credit), (ii) extend maturity to October 24, 2028, subject to certain conditions, (iii) allow for dividends, share buybacks, and acquisitions which combined with other permitted transactions, are not to exceed a total net leverage ratio of 2.00 to 1.00 and an aggregate liquidity not less than $400 million, (iv) remove the minimum book value of assets requirement, (v) add Weatherford Switzerland as a borrower, and (vi) modify certain pricing provisions and eliminate secured overnight financing rate exposure to certain letters of credit. The amendment also gives the ability to request an increase in total commitments by up to $200 million, upon satisfaction of certain conditions. We further amended the Credit Agreement on December 20, 2023, to permit a certain specified swap transaction.
As of December 31, 2023, we had zero borrowings outstanding under the Credit Agreement, and $376 million of letters of credit outstanding, consisting of the $270 million ($218 million for performance letters of credit and $52 million for financial letters of credit) under the Credit Agreement and another $106 million under various uncommitted bi-lateral facilities (of which there was $101 million in cash collateral held and recorded in “Restricted Cash” on the Consolidated Balance Sheets).
As of December 31, 2022, we had $395 million of letters of credit outstanding, consisting of the $195 million under the Credit Agreement and another $200 million under various uncommitted bi-lateral facilities (of which there was $199 million in cash collateral held and recorded in “Restricted Cash” on the Consolidated Balance Sheets).
In Latin America we utilize surety bonds as part of our customary business practice. As of December 31, 2023, we had $594 million of surety bonds outstanding. 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.
Critical Accounting Estimates
Our discussion and analysis of our financial condition and results of operation is based upon our Consolidated Financial Statements. We prepare these consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). As such, we are required to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. We base our estimates on historical experience and available information and various other assumptions we believe to be reasonable under the circumstances. On an on-going basis, we evaluate our estimates; however, actual results may differ from these estimates under different assumptions or conditions. The accounting policies we believe require management’s most difficult, subjective or complex judgments and are the most critical to our reporting of results of operations and financial position are as follows:
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Table of Contents Critical Accounting Policies and Estimates
Long-Lived Assets
Long-lived assets, which include property, plant and equipment (“PP&E”), definite-lived intangibles and operating lease assets, comprise a significant amount of our assets. The carrying value of our long-lived assets at December 31, 2023 and December 31, 2022 was approximately $1.5 billion. The cost of the long-lived assets is then amortized over its expected useful life or their respective lease terms, if applicable. A change in the estimated useful lives of our long-lived assets would have an impact on our results of operations. We estimate the useful lives of our long-lived assets over their respective lease terms, if applicable, or as follows:
Assets | Estimated Useful Lives | ||||
Buildings and Leasehold Improvements | 10 – 40 years | ||||
| Rental and Service Equipment | 3 – 10 years | ||||
| Machinery and Other | 2 – 12 years | ||||
| Intangible Assets | 5 – 10 years | ||||
In estimating the useful lives of our PP&E, we rely primarily on our actual experience with the same or similar assets. The useful lives of our intangible assets are determined by the years over which we expect the assets to generate a benefit based on legal, contractual or regulatory terms.
Long-lived assets to be held and used by us are reviewed to determine whether any events or changes in circumstances, known as triggering events, indicate that we may not be able to recover the carrying amount of the asset group. Triggering events include, but are not limited to, reduced or expected sustained decreases in cash flows generated by an asset group, negative changes in industry conditions (such as global rig count, commodity prices, and the global economy), a significant change in the long-lived assets’ use or physical condition, the introduction of competing technologies, and legal and regulatory challenges. The Company groups individual assets at the lowest level of identifiable cash flows and, if impairment triggers are present, performs an undiscounted cash flow analysis to identify asset groups that may not be recoverable. If the undiscounted cash flows do not exceed the carrying value of the long-lived asset group, the asset group is not recoverable, and impairment is recognized to the extent the carrying amount exceeds the estimated fair value of the asset group. A fair value assessment is performed on asset groups identified as not being recoverable using a discounted cash flow analysis or Level 3 fair value analysis, to determine if an impairment has occurred. The discounted cash flow analysis consists of estimating the future cash flows that are directly associated with, and are expected to arise from, the use and eventual disposition of the asset group over its remaining useful life. These estimated discounted cash flows are inherently subjective and includes significant assumptions, specifically the forecasted revenue, forecasted operating margins, and the discount rate assumptions and require estimates based upon historical experience and future expectations. The fair value of the asset group is measured using market prices, or in the absence of market prices, is based on an estimate of discounted cash flows. Cash flows are discounted at an interest rate commensurate with our weighted average cost of capital for a similar asset.
If an impairment has occurred, the Company recognizes a loss for the difference between the carrying amount and the fair value of the asset group.
We group long-lived assets by product line. We have long-lived assets, such as facilities, utilized by multiple operating divisions that do not have identifiable cash flows and impairment testing for these long-lived assets is based on the consolidated entity. We did not recognize long-lived assets impairments during 2023, 2022 and 2021.
Management cannot predict the occurrence of future impairment-triggering events, so we continue to assess whether indicators of impairment to long-lived assets exist due to the current business conditions in the energy services industry.
Income Taxes
We take into account the differences between the financial statement treatment and tax treatment of certain transactions. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates is recognized as income or expense in the period that includes the enactment date. See “Note 16 – Income Taxes” for detailed discussion of results.
Weatherford International plc – 2023 Form 10-K | 38
Table of Contents Critical Accounting Policies and Estimates
We recognize the impact of an uncertain tax position taken or expected to be taken on an income tax return in the financial statements at the largest amount that is more likely than not to be sustained upon examination by the relevant taxing authority.
We operate in approximately 75 countries through hundreds of legal entities. As a result, we are subject to numerous tax laws in the jurisdictions, and tax agreements and treaties among the various taxing authorities. Our operations in these jurisdictions in which we operate are taxed on various bases: income before taxes, deemed profits (which is generally determined using a percentage of revenues rather than profits), withholding taxes based on revenue, and other alternative minimum taxes. The calculation of our tax liabilities involves consideration of uncertainties in the application and interpretation of complex tax regulations in a multitude of jurisdictions across our global operations. We recognize potential liabilities and record tax liabilities for anticipated tax audit issues in the tax jurisdictions based on our estimate of whether, and the extent to which, additional taxes will be due. The tax liabilities are reflected net of realized tax loss carryforwards. We adjust these reserves upon specific events; however, due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is different from our current estimate of the tax liabilities.
If our estimate of tax liabilities proves to be less than the ultimate assessment, an additional charge to expense would result. If payment of these amounts ultimately proves to be less than the recorded amounts, the reversal of the liabilities would result in tax benefits being recognized in the period when the contingency has been resolved and the liabilities are no longer necessary. Changes in tax laws, regulations, agreements and treaties, foreign currency exchange restrictions or our level of operations or profitability in each taxing jurisdiction could have an impact upon the amount of income taxes that we provide during any given year.
In December 2023, Ireland enacted tax legislation that models the Organization of Economic Cooperation and Development (“OECD”) reform plans focused on global profit allocation and implementing a global minimum tax rate of at least 15% for large multinational corporations on a jurisdiction-by-jurisdiction basis, known as “Pillar Two.” This is not expected to materially increase the taxes we owe, however, if future legislation is enacted to implement the accord in other jurisdictions in which we have operations, it could materially increase the amount of taxes we owe, thereby negatively affecting our results of operations and our cash flows from operations.
Valuation Allowance for Deferred Tax Assets
We record a valuation allowance to reduce the carrying value of our deferred tax assets when it is more likely than not that a portion or all of the deferred tax assets will expire before realization of the benefit. The ultimate realization of the deferred tax assets depends on the ability to generate sufficient taxable income of the appropriate character and in the related jurisdiction in the future. In evaluating our ability to recover our deferred tax assets, we consider the available positive and negative evidence, including our past operating results, the existence of cumulative losses in the most recent years and our forecast of near-term future taxable income and various tax planning strategies.
When the likelihood of the realization of existing deferred tax assets changes, adjustments to the valuation allowance are charged to our income tax provision in the period in which the determination is made. The Company concluded it was not able to realize the benefits of certain of its deferred tax assets and has established a valuation allowance. Our valuation allowance on our deferred tax assets was $1.3 billion and $1.3 billion as of December 31, 2023, and December 31, 2022, respectively.
Forward-Looking Statements
This report contains various statements relating to future financial performance and results, business strategy, plans, goals and objectives, including certain projections, business trends and other statements that are not historical facts. These statements constitute forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “budget,” “strategy,” “plan,” “guidance,” “outlook,” “may,” “should,” “could,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions, although not all forward-looking statements contain these identifying words.
Forward-looking statements reflect our beliefs and expectations based on current estimates and projections. While we believe these expectations, and the estimates and projections on which they are based, are reasonable and were made in good faith, these statements are subject to numerous risks and uncertainties. Accordingly, our actual outcomes and results may differ materially from what we have expressed or forecasted in the forward-looking statements. The forward-looking statements included herein are only made as of the date of this report, or if earlier, as of the date they were made, and we undertake no obligation to correct,
Weatherford International plc – 2023 Form 10-K | 39
Table of Contents Forward-Looking Statements
update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except to the extent required under federal securities laws. The following, together with disclosures under “Part I – Item 1A. 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. and global inflationary pressures and potential recessionary concerns;
•failure to ensure on-going compliance with current and future laws and government regulations, including but not limited to those related to the Russia Ukraine Conflict, and environmental and tax and accounting laws, rules and regulations;
•changes in, and the administration of, treaties, laws, and regulations, including in response to issues related to the Russia Ukraine Conflict such as nationalization of assets, and the potential for such issues to exacerbate other risks we face, including those related to the other risks and uncertainties listed or referenced;
•cybersecurity incidents, as our reliance on digital technologies increases, those digital technologies may become more vulnerable and/or experience a higher rate of cybersecurity attacks, intrusions or incidents in the current environment of remote connectivity, as well as increased geopolitical conflicts and tensions, including as a result of the Russia Ukraine Conflict;
•our ability to comply with, and respond to, climate change, environmental, social and governance and other “sustainability” initiatives and future legislative and regulatory measures both globally and in the specific geographic regions in which we and our customers operate;
•our ability to effectively and timely address the need to conduct our operations and provision of services to our customers more sustainably and with a lower carbon footprint;
•risks associated with disease outbreaks and other public health issues, including a pandemic, their impact on the global economy and the business of our company, customers, suppliers and other partners;
•further spread and potential for a resurgence of a pandemic in a given geographic region and related disruptions to our business, employees, customers, suppliers and other partners and additional regulatory measures or voluntary actions that may be put in place to limit the spread of a pandemic, including vaccination requirements and the associated availability of vaccines, restrictions on business operations or social distancing requirements, and the duration and efficacy of such restrictions;
•the price and price volatility of, and demand for, oil, natural gas and natural gas liquids;
•member-country quota compliance within the Organization of Petroleum Exporting Countries;
•our ability to realize expected revenues and profitability levels from current and future contracts;
•our ability to generate cash flow from operations to fund our operations;
•our ability to effectively and timely adapt our technology portfolio, products and services to address and participate in changes to the market demands for the transition to alternate sources of energy such as geothermal, carbon capture and responsible abandonment, including our digitalization efforts;
•increases in the prices and lack of availability of our procured products and services;
•our ability to timely collect from customers;
•our ability to realize cost savings and business enhancements from our revenue and cost improvement efforts;
•our ability to attract, motivate and retain employees, including key personnel;
•our ability to access to capital markets on terms that are commercially acceptable to the Company;
•our ability to manage our workforce, supply chain challenges and disruptions, business processes, information technology systems and technological innovation and commercialization, including the impact of our organization restructure, business enhancements, improvement efforts and the cost and support reduction plans;
•our ability to service our debt obligations;
•potential non-cash asset impairment charges for long-lived assets, intangible assets or other assets; and
•adverse weather conditions in certain regions of our operations
Many of these factors are macro-economic 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.
Finally, our future results will depend upon various other risks and uncertainties, including, but not limited to, those detailed in our current and past filings with the SEC under the Exchange Act and the Securities Act of 1933, as amended.
Weatherford International plc – 2023 Form 10-K | 40
Table of Contents Forward-Looking Statements
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
Information related to market risk is included earlier in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – “Other Expense, Net” and “Derivative Financial Instruments” and later, in the Notes to Consolidated Financial Statements under Item 8. Financial Statements and Supplementary Data, in “Note 1 – Summary of Significant Accounting Policies”, “Note 9 – Fair Value of Financial Instruments, Assets and Other Assets” and “Note 10 – Derivative Financial Instruments”.
Weatherford International plc – 2023 Form 10-K | 41
Table of Contents Item 8 | Financial Statements and Supplementary Data
Item 8. Financial Statements and Supplementary Data.
INDEX TO FINANCIAL STATEMENTS
| PAGE | |||||
Reports of Independent Registered Public Accounting Firm ( | |||||
Weatherford International plc – 2023 Form 10-K | 42
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
Weatherford International plc:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Weatherford International plc and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 7, 2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Assessment of impairment triggering events related to long-lived assets
As discussed in Note 1 to the consolidated financial statements, the Company evaluates long-lived assets, consisting of property, plant and equipment, operating lease right-of use assets, and definite-lived intangible assets, for impairment to determine whether any events or changes in circumstances, known as triggering events, indicate that the carrying amount of an asset group may not be recoverable. The triggering events evaluated by the Company include reduced or expected sustained decreases in cash flows generated by an asset group, negative changes in industry conditions (such as global rig count, commodity prices, and the global economy), a significant change in the long-lived assets’ use or physical condition, the introduction of competing technologies, and legal and regulatory challenges. The carrying value of long-lived assets as of December 31, 2023 was $1.5 billion.
Weatherford International plc – 2023 Form 10-K | 43
We identified the assessment of impairment triggering events related to long-lived asset groups as a critical audit matter. The assessment of whether (i) reduced or expected sustained decreases in cash flows generated by an asset group and (ii) negative changes in industry conditions represented a triggering event required a higher degree of subjective auditor judgment.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s triggering events assessment. This included a control related to the Company’s process to identify and evaluate triggering events that indicate the carrying value of an asset group may not be recoverable. We evaluated the Company’s identification of triggering events related to the evaluation of cash flow trends for asset groups by comparing historical cash flow trends to the asset groups’ carrying values. Further, we evaluated the Company’s assessment of changes in industry conditions by comparing them to changes in global rig count, commodity prices, and economic outlook using data obtained from publicly available industry and market information.
/s/ KPMG LLP
We have served as the Company’s auditor since 2013.
Houston, Texas
February 7, 2024
Weatherford International plc – 2023 Form 10-K | 44
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
Weatherford International plc:
Opinion on Internal Control Over Financial Reporting
We have audited Weatherford International plc and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements), and our report dated February 7, 2024 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ KPMG LLP
Houston, Texas
February 7, 2024
Weatherford International plc – 2023 Form 10-K | 45
| WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES | |||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||
| Year Ended December 31, | |||||||||||
| (Dollars and shares in millions, except per share amounts) | 2023 | 2022 | 2021 | ||||||||
Revenue: | |||||||||||
| Services | $ | $ | $ | ||||||||
| Products | |||||||||||
Total Revenue | |||||||||||
| Costs and Expenses: | |||||||||||
| Cost of Services | |||||||||||
| Cost of Products | |||||||||||
| Research and Development | |||||||||||
| Selling, General and Administrative | |||||||||||
| Other Charges (Credits) | ( | ||||||||||
| Total Costs and Expenses | |||||||||||
| Operating Income | |||||||||||
| Other Income (Expense): | |||||||||||
Interest Expense, Net of Interest Income of $ | ( | ( | ( | ||||||||
| Loss on Blue Chip Swap Securities | ( | ||||||||||
| Loss on Extinguishment of Debt and Bond Redemption Premium | ( | ( | ( | ||||||||
| Other Expense, Net | ( | ( | ( | ||||||||
| Income (Loss) Before Income Taxes | ( | ||||||||||
| Income Tax Provision | ( | ( | ( | ||||||||
| Net Income (Loss) | ( | ||||||||||
| Net Income Attributable to Noncontrolling Interests | |||||||||||
| Net Income (Loss) Attributable to Weatherford | $ | $ | $ | ( | |||||||
| Basic Income (Loss) Per Share Attributable to Weatherford | $ | $ | $ | ( | |||||||
| Basic Weighted Average Shares Outstanding | |||||||||||
| Diluted Income (Loss) Per Share Attributable to Weatherford | $ | $ | $ | ( | |||||||
| Diluted Weighted Average Shares Outstanding | |||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
Weatherford International plc – 2023 Form 10-K | 46
| WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES | |||||||||||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||||||||||
| Year Ended December 31, | |||||||||||
| (Dollars in millions) | 2023 | 2022 | 2021 | ||||||||
| Net Income (Loss) | $ | $ | $ | ( | |||||||
| Foreign Currency Translation | ( | ( | ( | ||||||||
| Defined Benefit Pension | ( | ||||||||||
| Other Comprehensive Income (Loss) | ( | ||||||||||
| Comprehensive Income (Loss) | ( | ||||||||||
| Net Income Attributable to Noncontrolling Interests | |||||||||||
| Comprehensive Income (Loss) Attributable to Weatherford | $ | $ | $ | ( | |||||||
The accompanying notes are an integral part of these consolidated financial statements.
Weatherford International plc – 2023 Form 10-K | 47
| WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| December 31, | ||||||||
| (Dollars and shares in millions, except par value) | 2023 | 2022 | ||||||
| Assets: | ||||||||
| Cash and Cash Equivalents | $ | $ | ||||||
| Restricted Cash | ||||||||
Accounts Receivable, Net of Allowance for Credit Losses of $ | ||||||||
| Inventories, Net | ||||||||
| Other Current Assets | ||||||||
| Total Current Assets | ||||||||
Property, Plant and Equipment, Net of Accumulated Depreciation of $ | ||||||||
Intangible Assets, Net of Accumulated Amortization of $ $ | ||||||||
| Operating Lease Assets | ||||||||
| Other Non-current Assets | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities: | ||||||||
Current Portion of Long-term Debt | $ | $ | ||||||
| Accounts Payable | ||||||||
| Accrued Salaries and Benefits | ||||||||
| Income Taxes Payable | ||||||||
| Current Portion of Operating Lease Liabilities | ||||||||
| Other Current Liabilities | ||||||||
| Total Current Liabilities | ||||||||
| Long-term Debt | ||||||||
| Operating Lease Liabilities | ||||||||
Non-current Taxes Payable | ||||||||
| Other Non-current Liabilities | ||||||||
| Total Liabilities | ||||||||
| Shareholders’ Equity: | ||||||||
Ordinary Shares - Par value $ Outstanding | ||||||||
| Capital in Excess of Par Value | ||||||||
| Retained Deficit | ( | ( | ||||||
| Accumulated Other Comprehensive Loss | ( | ( | ||||||
| Weatherford Shareholders’ Equity | ||||||||
| Noncontrolling Interests | ( | |||||||
| Total Shareholders’ Equity | ||||||||
| Total Liabilities and Shareholders’ Equity | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
Weatherford International plc – 2023 Form 10-K | 48
| WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES | |||||||||||||||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY | |||||||||||||||||||||||||||||||||||
| (Dollars in millions) | Par Value of Issued Shares | Capital In Excess of Par Value | Retained Income (Deficit) | Accumulated Other Comprehensive Income (Loss) | Non-controlling Interests | Total Shareholders’ Equity | |||||||||||||||||||||||||||||
Balance at December 31, 2020 | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||
| Net Income (Loss) | — | — | ( | — | ( | ||||||||||||||||||||||||||||||
Equity Awards, Granted, Vested and Exercised, Net of Shares Withheld for Taxes | — | — | — | — | |||||||||||||||||||||||||||||||
| Other Comprehensive Income | — | — | — | — | |||||||||||||||||||||||||||||||
Distributions to Noncontrolling Interests | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Balance at December 31, 2021 | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||
| Net Income | — | — | — | ||||||||||||||||||||||||||||||||
Equity Awards, Granted, Vested and Exercised, Net of Shares Withheld for Taxes | — | — | — | — | |||||||||||||||||||||||||||||||
| Other Comprehensive Income | — | — | — | — | |||||||||||||||||||||||||||||||
Distributions to Noncontrolling Interests | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
| Other | — | — | — | ( | |||||||||||||||||||||||||||||||
Balance at December 31, 2022 | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||
| Net Income | — | — | — | ||||||||||||||||||||||||||||||||
Equity Awards, Granted, Vested and Exercised, Net of Shares Withheld for Taxes | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||
| Other Comprehensive Loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Distributions to Noncontrolling Interests | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
| Other | — | — | — | — | |||||||||||||||||||||||||||||||
Balance at | $ | $ | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
Weatherford International plc – 2023 Form 10-K | 49
| WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES | |||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
| Year Ended December 31, | |||||||||||
| (Dollars in millions) | 2023 | 2022 | 2021 | ||||||||
| Cash Flows From Operating Activities: | |||||||||||
| Net Income (Loss) | $ | $ | $ | ( | |||||||
| Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities: | |||||||||||
| Depreciation and Amortization | |||||||||||
Foreign Exchange Losses | |||||||||||
| Loss on Extinguishment of Debt and Bond Redemption Premium | |||||||||||
| Loss on Blue Chip Swap Securities | |||||||||||
| Inventory Charges | |||||||||||
Gain on Disposition of Assets | ( | ( | ( | ||||||||
Deferred Income Tax Provision (Benefit) | ( | ( | |||||||||
| Employee Share-Based Compensation Expense | |||||||||||
Changes in Accounts Receivable, Inventory, and Accounts Payable: | |||||||||||
Accounts Receivable | ( | ( | ( | ||||||||
Inventories | ( | ( | ( | ||||||||
Accounts Payable | |||||||||||
Other Changes, Net | |||||||||||
| Net Cash Provided by Operating Activities | $ | $ | $ | ||||||||
| Cash Flows From Investing Activities: | |||||||||||
| Capital Expenditures for Property, Plant and Equipment | $ | ( | $ | ( | $ | ( | |||||
| Proceeds from Disposition of Assets | |||||||||||
| Purchases of Blue Chip Swap Securities | ( | ||||||||||
| Proceeds from Sales of Blue Chip Swap Securities | |||||||||||
| Other Investing Activities | ( | ( | ( | ||||||||
| Net Cash Used in Investing Activities | $ | ( | $ | ( | $ | ( | |||||
| Cash Flows From Financing Activities: | |||||||||||
| Borrowings of Long-term Debt | $ | $ | $ | ||||||||
| Repayments of Long-term Debt | ( | ( | ( | ||||||||
| Bond Redemption Premium | ( | ( | ( | ||||||||
Distributions to Noncontrolling Interests | ( | ( | ( | ||||||||
| Tax Remittance on Equity Awards Vested | ( | ( | ( | ||||||||
| Other Financing Activities | ( | ( | ( | ||||||||
| Net Cash Used in Financing Activities | $ | ( | $ | ( | $ | ( | |||||
| Effect of Exchange Rate Changes on Cash and Cash Equivalents | ( | ( | ( | ||||||||
| Net Decrease in Cash, Cash Equivalents and Restricted Cash | ( | ( | ( | ||||||||
| Cash, Cash Equivalents and Restricted Cash at Beginning of Period | |||||||||||
| Cash, Cash Equivalents and Restricted Cash at End of Period | $ | $ | $ | ||||||||
| Supplemental Cash Flow Information | |||||||||||
| Interest Paid | $ | $ | $ | ||||||||
| Income Taxes Paid, Net of Refunds | $ | $ | $ | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
Weatherford International plc – 2023 Form 10-K | 50
Table of Contents Item 8 | Notes to the Consolidated Financial Statements
WEATHERFORD INTERNATIONAL PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1 – Summary of Significant Accounting Policies
Organization and Nature of Operations
Weatherford International plc (“Weatherford Ireland”), an Irish public limited company, together with its subsidiaries (“Weatherford,” the “Company,” “we,” “us” and “our”), is a multinational energy services company. Weatherford is one of the world’s leading providers of equipment and services used in the drilling, evaluation, completion, production and intervention of oil, geothermal and natural gas wells. We conduct business in approximately 75 countries and have service and sales locations in oil and natural gas producing regions globally.
The authorized share capital of Weatherford includes 1.356 billion ordinary shares with a par value of $0.001 per share. On June 1, 2021, the Nasdaq Stock Market LLC stock exchange (“NASDAQ”) approved our application for the listing of our ordinary shares. In connection with the listing, we became subject to the reporting requirements of the Securities Exchange Act of 1934 (as amended, the “Exchange Act”). Our ordinary shares began trading on the Nasdaq Global Select Market on June 2, 2021 under the ticker symbol “WFRD”.
Basis of Presentation and Principles of Consolidation
The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Exchange Act for annual financial information. We consolidate all wholly owned subsidiaries and controlled joint ventures and eliminate intercompany balances in consolidation.
Certain reclassifications have been made to the financial statements and accompanying footnotes to conform to the Company’s current period presentation.
Use of Estimates
Cash and Cash Equivalents
We consider all highly liquid investments with original maturities of three months or less to be cash equivalents.
Restricted Cash
Our restricted cash balance of $105 million at December 31, 2023 and $202 million at December 31, 2022 primarily includes cash collateral for certain of our letters of credit facilities.
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Table of Contents Item 8 | Notes to the Consolidated Financial Statements
Accounts Receivables and Allowance for Credit Losses
Substantially all of our customers are in fossil fuel-related industries and thus this concentration of customers may impact our overall exposure to credit risk, either positively or negatively, in that customers may be similarly affected by changes in economic and industry conditions. We perform periodic credit evaluations of our customers and do not generally require collateral in support of our trade receivables.
We establish an allowance for credit losses based on various factors, including historical experience, current conditions and environments in which our customers operate, the aging status and reasonable and supportable forecasts. The determination of the collectability requires us to use estimates and make judgments regarding future events and trends, including monitoring our customers’ payment history and current creditworthiness, as well as consideration of the overall business and political climate in which our customers operate. Risk profiles can vary between larger and smaller independent customers as well as between state-owned customers. Account balances are charged against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.
Property, Plant and Equipment (“PP&E”)
PP&E is both owned and under finance leases. Owned PP&E are initially stated at cost and finance leases are initially stated at the present value of lease payments. Both are depreciated on straight-line basis over its estimated useful life. Subsequently, PP&E is measured at cost less accumulated depreciation and adjusted for impairment, when applicable. The carrying values are based on our estimates and judgments relative to capitalized costs, useful lives and salvage value, where applicable. We expense maintenance and repairs as incurred and capitalize expenditures for improvements as well as renewals and replacements that extend the useful life of the asset.
We estimate the useful lives of our PP&E over their respective lease terms, if applicable, or as follows:
Assets | Estimated Useful Lives | ||||
| Buildings and leasehold improvements | |||||
| Rental and service equipment | |||||
| Machinery and other | |||||
Intangible Assets
Our identifiable intangible assets include developed and acquired technologies and our trade names, amortized on a straight-line basis over their estimated economic lives, generally ranging from 5 years (developed and acquired technologies) to 10 years (trade names). As many areas of our business rely on patents and proprietary technology, we seek patent protection both inside and outside the U.S. for products and methods that appear to have commercial significance. We capitalize patent defense costs when we determine that a successful defense is probable.
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Table of Contents Item 8 | Notes to the Consolidated Financial Statements
Leases
We are committed under various operating lease agreements primarily related to office space and equipment. Generally, these leases include renewal provisions and rental payments, which may be adjusted for taxes, insurance and maintenance related to the property. Leases with an initial term of 12 months or less (“short-term leases”) are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term.
Long-Lived Assets Impairment
Long-lived assets, consisting of PP&E, operating lease assets and intangible assets, to be held and used are reviewed to determine whether any events or changes in circumstances, known as triggering events, indicate that we may not be able to recover the carrying amount of the asset group. Triggering events include, but are not limited to, reduced or expected sustained decreases in cash flows generated by an asset group, negative changes in industry conditions (such as global rig count, commodity prices, and the global economy), a significant change in the long-lived assets’ use or physical condition, the introduction of competing technologies, and legal and regulatory challenges. The Company groups individual assets at the lowest level of identifiable cash flows and, if impairment triggers are present, performs an undiscounted cash flow analysis to identify asset groups that may not be recoverable. If the undiscounted cash flows do not exceed the carrying value of the long-lived asset group, impairment is recognized to the extent the carrying amount exceeds the estimated fair value of the asset group, as determined by a discounted cash flow analysis.
Research and Development Expenditures
Research and development expenditures are expensed as incurred.
Derivative Financial Instruments
We enter into foreign currency forward contracts to mitigate the risk of future cash flows denominated in a foreign currency. The amounts will fluctuate, depending on exchange rate volatility, the volume of our foreign currency transactions, and our decisions to hedge. During the fourth quarter of 2023, we entered into a credit default swap. The notional amounts of our foreign currency forward contracts and the credit default swap do not generally represent cash amounts exchanged by the parties and are calculated based on the terms of the derivative instrument.
Both our foreign currency forward contracts and the credit default swap are undesignated hedging instruments under Accounting Standards Codification “ASC” 815 Derivatives and Hedging. We record these derivative instruments on the balance sheet at their fair value as either assets or liabilities. See “Note 10 – Derivative Financial Instruments” for additional information.
The fair values of our outstanding derivative instruments are determined using models with either Level 2 or Level 3 inputs. See “Note 9 – Fair Value of Financial Instruments, Assets and Other Assets” for additional information.
Foreign Currency
Results of operations for our foreign subsidiaries with functional currencies other than the U.S. dollar are translated using average exchange rates during the period. Assets and liabilities translated using the exchange rates in effect at the balance sheet dates are included in “Accumulated Other Comprehensive Loss” on the accompanying Consolidated Statements of Shareholders' Equity.
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Table of Contents Item 8 | Notes to the Consolidated Financial Statements
Share-Based Compensation
Income Taxes
We account for taxes under the asset and liability method. Income taxes have been provided based upon the tax laws and rates in the countries in which our operations are conducted and income is earned. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. A valuation allowance for deferred tax assets is recorded when it is more likely than not that some or all of the benefit from the deferred tax asset will not be realized. The impact of an uncertain tax position taken or expected to be taken on an income tax return is recognized in the financial statements at the largest amount that is more likely than not to be sustained upon examination by the relevant taxing authority.
Disputes, Litigation and Contingencies
We accrue an estimate of costs to resolve certain disputes, legal matters and contingencies when a loss on these matters is deemed probable and reasonably estimable. For matters not deemed probable or not reasonably estimable, we have not accrued any amounts. Our contingent loss estimates are based upon an analysis of potential results, assuming a combination of possible litigation and settlement strategies. The accuracy of these estimates is impacted by the complexity of the associated issues.
Revenue Recognition
We account for revenue in accordance with ASU 2014-09, Revenue from Contracts with Customers (Topic 606), and all of the related amendments, collectively referred to as “Topic 606”. Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. The majority of our revenue is derived from short-term contracts. Our products and services are generally sold based upon purchase orders, contracts or other legally enforceable arrangements with our customers that include fixed or determinable prices but do not generally include right of return provisions or other significant post-delivery obligations.
If the terms of a service contract give us the right to invoice the customer for an amount that corresponds directly with the value of our performance completed to date, revenues are recognized at the amount to which we have the right to invoice.
For certain long-term contracts, our revenue is recognized for services over time as the services are rendered and we utilize an output method such as time elapsed or footage drilled, which coincides with how customers receive the benefit.
We lease drilling tools, artificial lift pumping equipment and other unmanned equipment to customers as operating leases. These equipment rental revenues are generally provided based on call-out work orders that include fixed per unit prices and are derived from short-term contracts. Equipment rental revenues are recognized under ASU No. 2016-02, Leases (Topic 842) and are recorded within “Services Revenue” on the accompanying Consolidated Statements of Operations.
Contract Balances
The timing of revenue recognition, billings and cash collections results in billed and unbilled accounts receivable (included in “Accounts Receivable, Net”), contract assets (included in “Other Current Assets” and “Other Non-Current Assets”), and contract liabilities (included in “Other Current Liabilities” and “Other Non-current Liabilities”) on our Consolidated Balance Sheets. We recognize receivables for work completed on service contracts but not billed in which the rights to consideration are conditional as contract assets. We recognize contract liabilities when consideration is received in advance of the recognition of revenue.
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Table of Contents Item 8 | Notes to the Consolidated Financial Statements
Performance Obligations
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.
We generally bill our sales of products and services upon completion of the performance obligation. Product sales and services are billed and recognized when control passes to the customer. Our products are produced in a standard manufacturing operation, even if produced to our customer’s specifications. Our payment terms vary by the type and location of our customer and the products or services offered. For certain products or services and customer types, we require payment before the products or services are delivered to the customer and record as a contract liability. We defer revenue recognition on such payments until the products or services are delivered to the customer.
Revenue is occasionally generated from contracts that include multiple performance obligations, such as product sales with related installation and/or maintenance services. The consideration in the contract is allocated between separate products and services based on their standalone selling prices (determined based on the prices at which we separately sell our products and services).
We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.
Income (Loss) per Share
Accounting Standards Issued Not Yet Adopted
In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, Segment Reporting (Topic 280)-Improvements to Reportable Segment Disclosures, an update that improves reportable segment disclosure requirements. Under ASU 2023-07, issuers must provide enhanced interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contains other disclosure requirements. The amendments are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, and should be applied retrospectively. We expect to adopt ASU 2023-07 in our 2024 Form 10-K and in the interim periods thereafter. The adoption of ASU 2023-07 will require us to provide additional disclosures related to our segments, but otherwise will not materially impact our financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, an update that improves income tax disclosure requirements. Under ASU 2023-09, issuers must annually (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate). The amendments are effective for fiscal years beginning after December 15, 2024 and should be applied prospectively. We expect to adopt ASU 2023-09 in our 2025 Form 10-K. The adoption of ASU 2023-09 will require us to provide additional disclosures related to our income taxes, but otherwise will not materially impact our financial statements.
Evaluations of all other new accounting pronouncements that have been issued, but not yet effective are on-going, and at this time are not expected to have a material impact on our Consolidated Financial Statements.
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Table of Contents Item 8 | Notes to the Consolidated Financial Statements
2 – Segment Information
The Company's chief operating decision maker (“CODM”), our chief executive officer, regularly reviews information to make operating decisions, allocate resources and assess performance of the business. The CODM regularly reviews information aligned with how we offer our services and technologies in relation to the well life cycle as reflected in our reportable segments. All of our segments are enabled by a suite of digital monitoring, control and optimization solutions using advanced analytics to provide safe, reliable and efficient solutions throughout the well life cycle, including responsible abandonment. We have three reportable segments: (1) Drilling and Evaluation (2) Well Construction and Completions, and (3) Production and Intervention.
Drilling and Evaluation (“DRE”) offers a suite of services including managed pressure drilling, drilling services, wireline and drilling fluids. DRE offerings range from early well planning to reservoir management through innovative tools and expert engineering to optimize reservoir access and productivity.
Well Construction and Completions (“WCC”) offers products and services for well integrity assurance across the full life cycle of the well. The primary offerings are tubular running services, cementation products, completions, liner hangers and well services. WCC deploys conventional to advanced technologies, providing safe and efficient services in any environment during the well construction phase.
Production and Intervention (“PRI”) offers a suite of reservoir stimulation designs, and engineering capabilities that isolate zones and unlock reserves in conventional and unconventional wells, deep water, and aging reservoirs. The primary offerings are intervention services & drilling tools, artificial lift, digital solutions (previously production automation & software), sub-sea intervention and pressure pumping services in select markets.
Total revenues are from external customers and segment revenues are specific to our three reportable segments and all other revenues are specific to our non-operating segment revenues. Revenues are further described in “Note 3 – Revenue.”
Our primary measure of segment profitability is segment adjusted EBITDA, which is based on segment earnings before interest, taxes, depreciation, amortization, share-based compensation expense and other adjustments. Research and development expenses are included in segment adjusted EBITDA. All other includes results from non-core business activities (including integrated services and projects), and corporate includes overhead support and centrally managed or shared facilities costs. All other and corporate do not individually meet the criteria for segment reporting.
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Table of Contents Item 8 | Notes to the Consolidated Financial Statements
| Year Ended December 31, | ||||||||||||||
| (Dollars in millions) | 2023 | 2022 | 2021 | |||||||||||
Revenue: | ||||||||||||||
DRE | $ | $ | $ | |||||||||||
WCC | ||||||||||||||
PRI | ||||||||||||||
| All Other | ||||||||||||||
Total Revenue | $ | $ | $ | |||||||||||
| Operating Income: | ||||||||||||||
| DRE Segment Adjusted EBITDA | $ | $ | $ | |||||||||||
| WCC Segment Adjusted EBITDA | ||||||||||||||
| PRI Segment Adjusted EBITDA | ||||||||||||||
All Other | ||||||||||||||
| Corporate | ( | ( | ( | |||||||||||
| Depreciation and Amortization | ( | ( | ( | |||||||||||
Share-based Compensation Expense (a) | ( | ( | ( | |||||||||||
| Other (Charges) Credits | ( | ( | ||||||||||||
Operating Income | $ | $ | $ | |||||||||||
(a)See “Note 13 – Share-Based Compensation” for additional information.
| Year Ended December 31, | |||||||||||
| (Dollars in millions) | 2023 | 2022 | 2021 | ||||||||
| Depreciation and Amortization: | |||||||||||
DRE | $ | $ | $ | ||||||||
WCC | |||||||||||
PRI | |||||||||||
Corporate and Other | |||||||||||
| Total Depreciation and Amortization | $ | $ | $ | ||||||||
| Capital Expenditures: | |||||||||||
DRE | $ | $ | |||||||||
WCC | |||||||||||
PRI | |||||||||||
| Corporate and Other | |||||||||||
| Total Capital Expenditures | $ | $ | $ | ||||||||
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Table of Contents Item 8 | Notes to the Consolidated Financial Statements
| December 31, | |||||||||||
| (Dollars in millions) | 2023 | 2022 | |||||||||
| Total Assets: | |||||||||||
DRE | $ | $ | |||||||||
WCC | |||||||||||
PRI | |||||||||||
Corporate and Other (a) | |||||||||||
| Total | $ | $ | |||||||||
(a) Corporate and other total assets primarily include cash and cash equivalents, certain intangible assets, and centrally
managed or shared facilities.
PP&E, Net and Operating Lease Assets by Geographic Area
As of December 31, 2023, and 2022 the U.S. accounted for 23 % and 22 %, respectively, and as of December 31, 2023, the Kingdom of Saudi Arabia accounted for 10 % of our PP&E, Net and operating lease assets identifiable by geography. No other country accounted for more than 10% of our PP&E, Net and operating lease assets identifiable by geography as of December 31, 2023 and 2022. We had no PP&E, Net and operating lease assets in our country of domicile (Ireland) as of December 31, 2023, and 2022.
| December 31, | ||||||||||||||
| (Dollars in millions) | 2023 | 2022 | ||||||||||||
North America (a) | $ | $ | ||||||||||||
| Latin America | ||||||||||||||
| Middle East/North Africa/Asia | ||||||||||||||
| Europe/Sub-Sahara Africa/Russia | ||||||||||||||
PP&E, Net and Operating Lease Assets by Geography (b) | $ | $ | ||||||||||||
(a) North America consists of the U.S. and Canada.
(b) Corporate assets not allocated by geography are excluded from this total.
3 – Revenue
Disaggregated Revenue
For additional details on our revenue recognition policies see “Note 1 – Summary of Significant Accounting Policies”.
The following tables disaggregate our revenue from contracts with customers by geographic region and includes equipment rental revenue. Equipment rental revenue were $142 million, $146 million and $131 million in 2023, 2022 and 2021, respectively.
During 2023, Mexico accounted for 13 % of total revenue, driven by our largest customer, which accounted for 10 % of our total revenue. During 2023, 2022 and 2021, the U.S. accounted for 16 %, 20 % and 19 % of total revenue, respectively. No other country or individual customer accounted for more than 10% of our total revenue in 2023, 2022 and 2021. We had no revenue in our country of domicile (Ireland) in 2023, 2022 and 2021.
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Table of Contents Item 8 | Notes to the Consolidated Financial Statements
| Year Ended December 31, | |||||||||||
| (Dollars in millions) | 2023 | 2022 | 2021 | ||||||||
Revenue by Geographic Areas: | |||||||||||
North America (a) | $ | $ | $ | ||||||||
International | |||||||||||
Latin America | |||||||||||
Europe/Sub-Sahara Africa/Russia | |||||||||||
Middle East/North Africa/Asia | |||||||||||
Total Revenue | $ | $ | $ | ||||||||
(a) North America consists of the U.S. and Canada.
Contract Balances
The timing of our revenue recognition, billings and cash collections result in the recording of accounts receivable, contract assets, and contract liabilities. The following table summarizes these balances as of December 31, 2023, and December 31, 2022:
| December 31, | ||||||||
| (Dollars in millions) | 2023 | 2022 | ||||||
| Receivables for Product and Services in Accounts Receivable, Net | $ | $ | ||||||
| Receivables for Equipment Rentals in Account Receivable, Net | $ | $ | ||||||
Accounts Receivable, Net of Allowance for Credit Losses of $ | $ | $ | ||||||
| Contract Assets in Other Current Assets | $ | $ | ||||||
| Contract Assets in Other Non-Current Assets | $ | $ | ||||||
| Contract Liabilities in Other Current Liabilities | $ | $ | ||||||
| Contract Liabilities in Other Non-Current Liabilities | $ | $ | ||||||
(a)The change in allowance for credit losses includes charges offset primarily by recoveries and write-offs. The credit loss charges were $9 million, $10 million and $30 million during 2023, 2022 and 2021, respectively. Offsets to allowance for credit losses were primarily recoveries and write-offs of $19 million, $15 million and $31 million during 2023, 2022 and 2021, respectively.
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Table of Contents Item 8 | Notes to the Consolidated Financial Statements
4 – Inventories, Net
Inventories, net of reserves of $121 million and $129 million as of December 31, 2023 and December 31, 2022, respectively, by category were as follows:
| December 31, | ||||||||
| (Dollars in millions) | 2023 | 2022 | ||||||
| Finished Goods | $ | $ | ||||||
| Work in Process and Raw Materials, Components and Supplies | ||||||||
| Inventories, Net | $ | $ | ||||||
The change in inventory reserves includes the inventory charges below, primarily offset by the disposal of inventory previously reserved.
Inventory charges were recognized in the following captions on our Consolidated Statements of Operations:
| Year Ended December 31, | ||||||||||||||
| (Dollars in millions) | 2023 | 2022 | 2021 | |||||||||||
| Inventory Charges in “Cost of Products” | $ | $ | $ | |||||||||||
| Inventory Charges in “Other Charges (Credits)” | ||||||||||||||
Total Inventory Charges | $ | $ | $ | |||||||||||
5 – Property, Plant and Equipment, Net
Property, plant and equipment, net was composed of the following:
| December 31, | ||||||||
| (Dollars in millions) | 2023 | 2022 | ||||||
| Land, Buildings and Leasehold Improvements | $ | $ | ||||||
| Rental and Service Equipment | ||||||||
| Machinery and Other | ||||||||
| Property, Plant and Equipment, Gross | ||||||||
| Less: Accumulated Depreciation | ||||||||
| Property, Plant and Equipment, Net | $ | $ | ||||||
Depreciation expense was $171 million, $194 million and $284 million in 2023, 2022 and 2021, respectively.
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Table of Contents Item 8 | Notes to the Consolidated Financial Statements
6 – Intangible Assets, Net
The components of intangible assets, net were as follows:
| Gross | Net | ||||||||||||||||
| Carrying | Accumulated | Intangible | |||||||||||||||
| (Dollars in millions) | Amount | Amortization | Assets | ||||||||||||||
| Developed and Acquired Technology | $ | $ | ( | $ | |||||||||||||
| Trade Names | ( | ||||||||||||||||
| Intangible Assets, Net | $ | $ | ( | $ | |||||||||||||
December 31, 2022 | |||||||||||||||||
| Gross | Net | ||||||||||||||||
| Carrying | Accumulated | Intangible | |||||||||||||||
| (Dollars in millions) | Amount | Amortization | Assets | ||||||||||||||
| Developed and Acquired Technology | $ | $ | ( | $ | |||||||||||||
| Trade Names | ( | ||||||||||||||||
| Intangible Assets, Net | $ | $ | ( | $ | |||||||||||||
Amortization expense was $156 million, $155 million and $156 million in 2023, 2022, and 2021, respectively. Based on the carrying value of intangible assets at December 31, 2023 , amortization expense for the subsequent five years is estimated as follows (dollars in millions):
| Period | Amount | ||||
2024 | $ | ||||
2025 | |||||
2026 | |||||
2027 | |||||
| 2028 | |||||
Weatherford International plc – 2023 Form 10-K | 61
Table of Contents Item 8 | Notes to the Consolidated Financial Statements
7 – Leases
The following table presents our lease expense components:
| Year Ended December 31, | ||||||||||||||
| (Dollars in millions) | 2023 | 2022 | 2021 | |||||||||||
| Lease Expense Components: | ||||||||||||||
| Operating Lease Expense | $ | $ | $ | |||||||||||
| Short-term and Variable Lease Expense | ||||||||||||||
| Subtotal of Operating Lease Expense | $ | $ | $ | |||||||||||
| Finance Lease Expense: Amortization of Assets and Interest on Lease Liabilities | ||||||||||||||
| Sublease Income | ( | ( | ( | |||||||||||
| Total Lease Expense | $ | $ | $ | |||||||||||
Future commitments under operating and finance leases are as follows:
| Operating | Finance | ||||||||||
| (Dollars in millions) | Leases | Leases | |||||||||
Maturity of Lease Liabilities as of | |||||||||||
2024 | $ | $ | |||||||||
2025 | |||||||||||
2026 | |||||||||||
2027 | |||||||||||
2028 | |||||||||||
After 2028 | |||||||||||
| Total Lease Payments | |||||||||||
| Less: Interest | ( | ( | |||||||||
| $ | $ | ||||||||||
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Table of Contents Item 8 | Notes to the Consolidated Financial Statements
| Years Ended | |||||||||||
| (Dollars in millions except years and percentages) | 12/31/2023 | 12/31/2022 | 12/31/2021 | ||||||||
| Other Supplemental Information: | |||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||
| Operating cash outflows from operating leases | $ | $ | $ | ||||||||
| Operating cash outflows from finance leases | $ | $ | $ | ||||||||
| Financing cash outflows from finance leases | $ | $ | $ | ||||||||
Assets obtained in exchange for: | |||||||||||
| Operating leases | $ | $ | $ | ||||||||
| Finance leases | $ | $ | $ | ||||||||
| Weighted-average remaining lease term (years) | |||||||||||
| Operating leases | |||||||||||
| Finance leases | |||||||||||
| Weighted-average discount rate (percentages) | |||||||||||
| Operating leases | % | % | % | ||||||||
| Finance leases | % | % | % | ||||||||
Weatherford International plc – 2023 Form 10-K | 63
Table of Contents Item 8 | Notes to the Consolidated Financial Statements
8 – Borrowings and Other Debt Obligations
Total debt carrying values consisted of the following:
| December 31, | |||||||||||
| (Dollars in millions) | 2023 | 2022 | |||||||||
Current portion of | $ | $ | |||||||||
Current portion of | |||||||||||
| Current Portion of Long-term Debt | $ | $ | |||||||||
| $ | $ | ||||||||||
| Long-term Debt | $ | $ | |||||||||
Our Exit Notes and 2028 Senior Secured Notes were issued by Weatherford International Ltd., a Bermuda exempted company (“Weatherford Bermuda”), and guaranteed by the Company and Weatherford International, LLC, a Delaware limited liability company (“Weatherford Delaware”) and other subsidiary guarantors party thereto. The 2028 Senior Secured Notes and the related guarantees are secured by substantially all of the assets and properties of the Company and the other guarantors (on an effectively first-priority basis with respect to the priority collateral for the 2028 Senior Secured Notes, and on an effectively second-priority basis with respect to the priority collateral for the senior secured letter of credit agreement (now the “Credit Agreement”), in each case, subject to permitted liens).
Our 2030 Senior Notes were originally issued by Weatherford Bermuda and guaranteed by the Company and Weatherford Delaware and other subsidiary guarantors party thereto. On December 1, 2022, the indenture related to our 2030 Senior Notes was amended and supplemented to add Weatherford Delaware as co-issuer and co-obligor, and concurrently releases the guarantee of Weatherford Delaware.
The bond redemption premiums and noncash loss on extinguishment of debt related to the unamortized debt issuance costs described in the following paragraphs are presented as “Loss on Extinguishment of Debt and Bond Redemption Premium” on the Consolidated Statements of Operations. Additionally, debt issuance costs described in the following paragraphs reduce the carrying amount of the debt liability and are recognized using the effective interest rate method over the term of the debt in “Interest Expense, Net of Interest Income” on our Consolidated Financial Statements.
Exit Notes
On December 13, 2019, we issued unsecured 11.00 % Exit Notes due in 2024 for an aggregate principal amount of $2.1 billion. Interest on the Exit Notes accrues at the rate of 11.00 % per annum and is payable semiannually on June 1 and December 1. Proceeds from the issuance were reduced by debt issuance costs.
In 2021, we redeemed $1.8 billion in principal amount and paid the related accrued interest along with a bond redemption premium of $109 million and recognized a $2 million noncash loss on extinguishment of debt related to the unamortized debt issuance costs. Part of this redemption used net proceeds from our issuance of $1.6 billion of 2030 Senior Notes (defined below) and cash on hand.
In 2022, we redeemed $175 million in principal amount and paid the related accrued interest along with a bond redemption premium of $5 million. During the fourth quarter of 2022, we elected to redeem an additional $20 million and presented this amount as “Short-term Borrowings and Current Portion of Long-term Debt” on the Consolidated Financial Statements as of December 31, 2022.
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Table of Contents Item 8 | Notes to the Consolidated Financial Statements
In 2023, we fully redeemed the remaining $125 million principal amount and paid the related accrued interest along with a bond redemption premium of $3 million.
2024 Senior Secured Notes
On August 28, 2020, we entered into an indenture and issued the 8.75 % Senior Secured Notes for an aggregate principal amount of $500 million maturing September 1, 2024 (the “2024 Senior Secured Notes”). Interest accrued at the rate of 8.75 % per annum and was payable semiannually on March 1 and September 1. In 2021, we fully repaid the remaining unpaid principal of $500 million, along with a $22 million bond redemption premium and recognized a $37 million noncash loss on extinguishment of debt related to the unamortized debt issuance costs and discount.
2028 Senior Secured Notes
On September 30, 2021, we issued 6.5 % Senior Secured Notes in aggregate principal amount of $500 million maturing September 15, 2028 (the “2028 Senior Secured Notes”). Interest accrues at the rate of 6.5 % per annum and is payable semiannually on September 15 and March 15 of each year, and commenced March 15, 2022. Proceeds from the issuance were reduced by debt issuance costs. In 2023, we repurchased $243 million in principal along with a $2 million bond redemption premium and in 2022, we repurchased $8 million in principal of our 2028 Senior Secured Notes. At December 31, 2023 and December 31, 2022, the carrying value represents the remaining unpaid principal of $248 million and $492 million, respectively, offset by unamortized deferred issuance cost of $5 million and $10 million, respectively. Subsequent to year-end, in January 2024, we repurchased an additional $151 million (presented as “Short-term Borrowings and Current Portion of Long-term Debt” on the Consolidated Financial Statements as of December 31, 2023) in principal amount of our 2028 Senior Secured Notes, leaving $97 million as the remaining unpaid principal.
2030 Senior Notes
On October 27, 2021, we issued 8.625 % Senior Notes in aggregate principal amount of $1.6 billion maturing April 30, 2030 (the “2030 Senior Notes”). Interest accrues at the rate of 8.625 % per annum and is payable semiannually on June 1 and December 1 of each year, and commenced June 1, 2022. On December 1, 2022, we modified our 2030 Senior Notes, as described earlier. At December 31, 2023 and December 31, 2022, the carrying value represents the remaining unpaid principal of $1.6 billion at each date, offset by unamortized deferred issuance cost of $13 million and $14 million, respectively.
Credit Agreement
Weatherford Bermuda, Weatherford Delaware, Weatherford Canada Ltd. (“Weatherford Canada”) and WOFS International Finance GmbH (“Weatherford Switzerland”), together as borrowers, and the Company as parent, have an amended and restated credit agreement (the “Credit Agreement”). The Credit Agreement is guaranteed by the Company and certain of our subsidiaries and secured by substantially all of the personal property of the Company and those subsidiaries. At December 31, 2023, the Credit Agreement allowed for a total commitment amount of $550 million, maturing on the earlier of October 24, 2028 and 91 days prior to the maturity of the 2028 Senior Secured Notes. Financial covenants in the Credit Agreement include a $250 million minimum liquidity covenant (which may increase up to $400 million dependent on the nature of transactions we may decide to enter into), a minimum interest coverage ratio of 2.50 to 1.00, a maximum total net leverage ratio of 3.50 to 1.00, and a maximum secured net leverage ratio of 1.50 to 1.00.
On March 24, 2023, we amended the Credit Agreement to permit unlimited prepayments and other redemptions of indebtedness subject to (i) the ratio of funded debt (net of unrestricted cash in excess of $400 million) to consolidated adjusted EBITDA as defined in the Credit Agreement, not exceeding 2.50 to 1.00, (ii) no default or event of default existing and (iii) aggregate proforma liquidity in the event of a debt reduction equaling or exceeding $300 million.
Weatherford International plc – 2023 Form 10-K | 65
Table of Contents Item 8 | Notes to the Consolidated Financial Statements
On October 24, 2023, we amended the Credit Agreement to, among other things, (i) allow for an increase in total commitment amount from $400 million to $550 million ($250 million for performance letters of credit and $300 million for either borrowings or additional performance or financial letters of credit), (ii) extend maturity to October 24, 2028, subject to certain conditions, (iii) allow for dividends, share buybacks, and acquisitions which combined with other permitted transactions, are not to exceed a total net leverage ratio of 2.00 to 1.00 and an aggregate liquidity not less than $400 million, (iv) remove the minimum book value of assets requirement, (v) add Weatherford Switzerland as a borrower, and (vi) modify certain pricing provisions and eliminate secured overnight financing rate exposure to certain letters of credit. The amendment also gives the ability to request an increase in total commitments by up to $200 million, upon satisfaction of certain conditions. We further amended the Credit Agreement on December 20, 2023, to permit a certain specified swap transaction.
As of December 31, 2023 , we had zero borrowings outstanding under the Credit Agreement, and $376 million of letters of credit outstanding, consisting of the $270 million ($218 million for performance letters of credit and $52 million for financial letters of credit) under the Credit Agreement and another $106 million under various uncommitted bi-lateral facilities (of which there was $101 million in cash collateral held and recorded in “Restricted Cash” on the Consolidated Balance Sheets).
As of December 31, 2022, we had $395 million of letters of credit outstanding, consisting of the $195 million under the Credit Agreement and another $200 million under various uncommitted bi-lateral facilities (of which there was $199 million in cash collateral held and recorded in “Restricted Cash” on the Consolidated Balance Sheets).
Covenants for the 2028 Senior Secured Notes and 2030 Senior Notes and Credit Agreement
The indentures governing the 2028 Senior Secured Notes and 2030 Senior Notes contain covenants that limit, among other things, our ability and the ability of certain of our subsidiaries, to: incur, assume or guarantee additional indebtedness; pay dividends or distributions on capital stock or redeem or repurchase capital stock; make investments; sell stock of our subsidiaries; transfer or sell assets; create liens; enter into transactions with affiliates; and enter into mergers or consolidations. The Company is subject to a $250 million minimum liquidity covenant which may increase up to $400 million dependent on the nature of transactions we may decide to enter into, a minimum interest coverage ratio of 2.50 to 1.00, a maximum total net leverage ratio of 3.50 to 1.00, and a maximum secured net leverage ratio of 1.50 to 1.00.
The indentures also provide for certain customary events of default, including, among others, nonpayment of principal or interest, failure to pay final judgments in excess of a specified threshold, failure of a guarantee to remain in effect, bankruptcy and insolvency events, and cross acceleration, which would permit the principal, premium, if any, interest and other monetary obligations on all the then outstanding 2028 Senior Secured Notes to be declared due and payable immediately.
The following is a summary of scheduled debt maturities by year:
| (Dollars in millions) | Amount | ||||
2024 | $ | ||||
2025 | |||||
2026 | |||||
2027 | |||||
2028 | |||||
| Thereafter | |||||
| Total Debt Maturities | $ | ||||
| Unamortized Debt Issuance and Discount | $ | ( | |||
| Total Debt Carrying Value | $ | ||||
Weatherford International plc – 2023 Form 10-K | 66
Table of Contents Item 8 | Notes to the Consolidated Financial Statements
9 – Fair Value of Financial Instruments, Assets and Other Assets
We estimate fair value at a price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal market for the asset or liability. Our valuation techniques require inputs that we categorize using a three-level hierarchy, from highest to lowest level of observable inputs. Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 inputs are quoted prices or other market data for similar assets and liabilities in active markets, or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based upon our own judgment and assumptions used to measure assets and liabilities at fair value. Classification of a financial asset or liability within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement. The fair values of our foreign currency forward contracts (see “Note 10 – Derivative Financial Instruments”), warrants (before their expiration, see “Note 14 – Shareholders’ Equity”), and plan assets of defined benefit pension plans (see “Note 11 – Employee Benefit Plans”) are all Level 2 valuations and the fair value of the credit default swap is a Level 3 valuation (see “Note 10 – Derivative Financial Instruments”).
Our other financial instruments include cash and cash equivalents, accounts receivable, accounts payable, short-term borrowings and long-term debt. The carrying values of these financial instruments (excluding long-term debt) approximate their fair value due to their short maturities.
The fair value of our long-term debt fluctuates with changes in applicable interest rates among other factors. Fair value will exceed carrying value when the current market interest rate is lower than the interest rate at which the debt was originally issued and will be less than the carrying value when the current market interest rate is greater than the interest rate at which the debt was originally issued. The fair value of our long-term debt (excluding Finance Leases) in the following table is classified as Level 2 in the fair value hierarchy and is established based on observable inputs in less active markets.
December 31, 2022 | ||||||||||||||
| (Dollars in millions) | Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||
| $ | $ | $ | $ | |||||||||||
| Long-Term Debt (excluding Finance Leases) | $ | $ | $ | $ | ||||||||||
Weatherford International plc – 2023 Form 10-K | 67
Table of Contents Item 8 | Notes to the Consolidated Financial Statements
10 – Derivative Financial Instruments
Both our foreign currency forward contracts and the credit default swap are undesignated hedging instruments under ASC 815, Derivatives and Hedging.
Foreign Currency Forward Contracts
We enter into foreign currency forward contracts to economically hedge our exposure to currency fluctuations in various foreign currencies. At December 31, 2023 and December 31, 2022, we had outstanding foreign currency forward contracts with notional amounts aggregating to $448 million and $147 million, respectively. The fair values of these derivatives were not material as of December 31, 2023 and December 31, 2022.
Credit Default Swap
During the fourth quarter of 2023, we entered into a credit default swap (“CDS”) with a third-party financial institution terminating in February of 2026 related to a secured loan between that third-party financial institution and our largest customer in Mexico. The secured loan was utilized by this customer to pay certain of our outstanding receivables and accordingly, in the fourth quarter of 2023 and January of 2024, we received $140 million and $142 million, respectively.
Under the CDS terms, within five business days upon notification of default, we could be required to pay the then outstanding notional balance net of recoveries. As of December 31, 2023 , we had a notional balance of $130 million outstanding under the CDS, which increased to $260 million in January of 2024, following the receipt of the $142 million payment. Management expects the total notional balance under the CDS to decrease to $161 million, $54 million and nil by December 31, 2024, December 31, 2025 and March 31, 2026, respectively. The fair value of this derivative was not material as of December 31, 2023.
As of the date of this report, we are not aware of any events of default under the loan agreement between that third-party financial institution and our largest customer in Mexico.
11 – Employee Benefit Plans
We have defined contribution plans covering certain employees. Contribution expenses related to these plans totaled $18 million, $18 million and $16 million for the years ended December 31, 2023, 2022 and 2021, respectively.
We have defined benefit pension and other post-retirement benefit plans covering certain U.S. and international employees. Plan benefits are generally based on factors such as age, compensation levels and years of service. Net periodic benefit cost related to these plans totaled $3 million, $4 million, and $4 million for the years ended December 31, 2023, 2022 and 2021, respectively. The projected benefit obligations on a consolidated basis were $130 million and $121 million as of December 31, 2023 and December 31, 2022, respectively. The increase year over year is due primarily to actuarial losses as a result of decreased discount rates. The fair values of plan assets on a consolidated basis were $106 million and $97 million as of December 31, 2023 and December 31, 2022, respectively. The increase year over year is due primarily to investment gains. As of December 31, 2023 , the net underfunded obligation consisted of $18 million of funded obligations recorded to “Other Non-current Assets” and $42 million of underfunded obligations substantially all recorded to “Other Non-current Liabilities” on our Consolidated Balance Sheets. As of December 31, 2022, the net underfunded obligation consisted of $15 million of funded obligations recorded to “Other Non-current Assets” and $39 million of underfunded obligations substantially all recorded to “Other Non-current Liabilities” on our Consolidated Balance Sheets. Additionally, the consolidated pre-tax amount in accumulated other comprehensive income (loss) as of December 31, 2023 and December 31, 2022, that has not yet been recognized as a component of net periodic benefit cost was a net gain of $15 million and net gain of $19 million, respectively. As mentioned above, decreased discount rates were the primary driver of the overall loss in 2023.
Weatherford International plc – 2023 Form 10-K | 68
Table of Contents Item 8 | Notes to the Consolidated Financial Statements
The weighted average assumption rates used for benefit obligations were as follows:
Year Ended December 31, | ||||||||
2023 | 2022 | |||||||
| Discount rate: | ||||||||
| United States Plans | ||||||||
| International Plans | ||||||||
| Rate of Compensation Increase: | ||||||||
| United States Plans | — | — | ||||||
| International Plans | ||||||||
12 – Disputes, Litigation and Legal Contingencies
We are subject to lawsuits and claims arising out of the nature of our business. We have certain claims, disputes and pending litigation for which we do not believe a negative outcome is probable or for which we can only estimate a range of liability. It is possible, however, that an unexpected judgment could be rendered against us, or we could decide to resolve a case or cases, which would result in a liability that could be uninsured and beyond the amounts we currently have reserved and in some cases those losses could be material. If one or more negative outcomes were to occur relative to these cases, the aggregate impact to our financial condition could be material.
GAMCO Shareholder Litigation
On September 6, 2019, GAMCO Asset Management, Inc. (“GAMCO”), purportedly on behalf of itself and other similarly situated shareholders, filed a lawsuit asserting violations of the federal securities laws against certain then-current and former officers and directors of the Company. GAMCO alleged violations of Sections 10(b) and 20(b) of the Securities Exchange Act of 1934, and violations of Sections 11 and 15 of the Securities Act of 1933, as amended (the “Securities Act”) based on allegations that the Company and certain of its officers made false and/or misleading statements, and alleged non-disclosure of material facts, regarding our business, operations, prospects and performance. GAMCO sought damages on behalf of purchasers of the Company’s ordinary shares from October 26, 2016, through May 10, 2019. GAMCO’s lawsuit was filed in the United States District Court for the Southern District of Texas, Houston Division, and it is captioned GAMCO Asset Management, Inc. v. McCollum, et al., Case No. 4:19-cv-03363. The District Court Judge appointed Utah Retirement Systems (“URS”) as Lead Plaintiff, and on March 16, 2020, URS filed its Amended Complaint. URS added the Company as a defendant but dropped the claims against non-officer board members and all the claims under the Securities Act. The defendants filed their motion to dismiss on May 18, 2020, and the Court granted the motion on May 14, 2021. URS appealed the Court’s Opinion on Dismissal to the Court of Appeals for the Fifth Circuit.
On December 14, 2023, the Fifth Circuit affirmed the decision from the trial court dismissing plaintiffs’ claims.
Weatherford International plc – 2023 Form 10-K | 69
Table of Contents Item 8 | Notes to the Consolidated Financial Statements
13 – Share-Based Compensation
Share-Based Plan
The Weatherford International plc Third Amended and Restated 2019 Equity Incentive Plan, (“2019 Equity Plan”) authorizes the issuance of 8.6 million shares of common stock by the Board of Directors in the form of options, share appreciation rights, restricted share awards, restricted share units (“RSUs”), performance-based restricted share units (“PSUs”), phantom restricted share units (“Phantom RSUs”) and other share-based and performance-based awards to any employee, consultant, or non-employee director (“Grantees”). The provisions of each award vary based on the type of award granted. Awards made under the 2019 Equity Plan vest and settle in shares of newly issued common stock or cash. As of December 31, 2023, there were 2.5 million shares available for future grants.
We granted RSUs, PSUs, and Phantom RSUs under the 2019 Equity Plan. All awards generally require continued employment and generally vest over to three years . The Grantees do not have the rights of a shareholder under these awards until such date as the shares are issued.
Share-Based Compensation Expense
Share-based compensation expense was $35 million for the year ended December 31, 2023, and $25 44 million of unrecognized compensation cost, which is expected to be recognized over a weighted-average period of less than two years .
Due to valuation allowances in the taxing jurisdictions of our Grantees, there was an immaterial related tax impact for the year ended December 31, 2023 and no related tax impact for the years ended December 31, 2022 and 2021.
RSUs
RSUs vest based generally on continued employment. The fair value of RSUs are determined based on the closing price of our shares on the date of grant. The total fair value, less forfeitures, is expensed over the vesting period. The weighted-average grant date fair value per unit (“WAGD FV”) of RSUs granted during 2023, 2022 and 2021 was $54.85 , $30.90 and $6.54 , respectively. The fair value of RSUs vested during 2023, 2022 and 2021 was $33 million, $18 million and $2 million, respectively. Cash used to settle RSUs in 2023 and 2022 was less than $1 million and $2 million, respectively. Cash was not used to settle RSUs in 2021.
PSUs
PSUs vest based generally on continued employment and achievement of an established target. The fair value of PSUs depends on whether the established target is a performance condition defined solely by reference to our own operations or the market performance of our shares (“market condition”). The actual number of PSUs earned is subject to increase or decrease based on the performance goal multiplier and may range from 0 % to 200 %. The total fair value, less forfeitures, is expensed over the vesting period. The WAGD FV per unit of PSUs granted during 2023, 2022 and 2021 was $70.91 , $23.14 and $12.62 , respectively. The fair value of PSUs vested during 2023, 2022 and 2021, was $118 million, nil and $2 million respectively.
The fair value of PSUs subject to performance conditions defined solely by reference to our own operations is determined based on the closing price of our shares on the date of grant. The units are adjusted periodically based on the metric’s expected performance goal multiplier.
Weatherford International plc – 2023 Form 10-K | 70
Table of Contents Item 8 | Notes to the Consolidated Financial Statements
The fair value of PSUs subject to market conditions is determined by utilizing an advanced option-pricing model. All compensation cost is recognized if the employment condition is fulfilled even if the market condition is never satisfied, as the likelihood of achieving the market condition is incorporated into the fair value of the award. The weighted average of assumptions used in the models were as follows:
| 2023 | 2022 | 2021 | |||||||||||||||
| Risk-Free rate | % | % | % | ||||||||||||||
| Dividend Yield | n/a | n/a | n/a | ||||||||||||||
| Expected Volatility | % | % | % | ||||||||||||||
| Expected Life (in years) | |||||||||||||||||
The risk-free rate is obtained as of the grant date with terms matching the performance period. The dividend yield is based on historical dividend payments and expectations of management. For the year ended December 31, 2023, expected volatility incorporated our NASDAQ trading history along with the volatility of our constituents. For the years ended December 31, 2022 and 2021, the expected volatility was based on comparable companies’ volatility. The expected life in years is based on the performance measurement period.
Phantom RSUs
Phantom RSUs were exclusively granted in 2021. Due to achievement of the predetermined capped amounts in year one, the awards were cash-settled in 2022 for $14 million, and the remaining in 2023 for an immaterial amount.
Summary of Awards Activity
A summary of activity for non-vested RSUs, PSUs, and Phantom RSUs outstanding and their respective WAGD FV during 2023 is presented below.
(Units in thousands, except dollars) | RSU | WAGD FV | PSU(1) | WAGD FV | Phantom RSU | WAGD FV | ||||||||||||||
Non-Vested at December 31, 2022 | $ | $ | $ | |||||||||||||||||
| Granted | ||||||||||||||||||||
| Vested | ( | ( | ( | |||||||||||||||||
| Cancelled or Forfeited | ( | ( | ( | |||||||||||||||||
Non-Vested at December 31, 2023 | $ | $ | $ | |||||||||||||||||
(1) Vested PSUs during 2023 earned a 200 % multiplier. Non-Vested PSUs at December 31, 2023 were comprised of 1,145 PSUs with an achieved 100 % performance goal multiplier and 526 PSUs with the potential for up to a 200 % performance goal multiplier.
Weatherford International plc – 2023 Form 10-K | 71
Table of Contents Item 8 | Notes to the Consolidated Financial Statements
14 – Shareholders’ Equity
Our ordinary shares outstanding for the years ended December 31, 2023 , 2022 and 2021 primarily increased upon the vesting and settlement of awards made under the 2019 Equity Plan.
On December 13, 2019, the day we emerged from bankruptcy, we issued warrants allowing the holders to purchase up to an aggregate of 7,777,779 ordinary shares in the Company, par value $0.001 , at an exercise price of $99.96 per ordinary share. The warrants were equity classified and, upon issuance, had a value of $31 million, which was recorded in “Capital in Excess of Par Value.” The warrant fair value was a Level 2 valuation and was estimated using the Black Scholes valuation model. Inputs to the model included Weatherford’s share price, volatility of our share price, and the risk-free interest rate.
On December 13, 2023, the remaining 7,774,134 unexercised warrants expired, and the rights of the warrant holders to purchase ordinary shares were terminated. During 2023 and 2022, an immaterial number of warrants were exercised.
Accumulated Other Comprehensive Loss
The following table presents the changes in our accumulated other comprehensive loss by component:
| (Dollars in millions) | Foreign Currency Translation | Defined Benefit Pension | Total | ||||||||||||||
Balance at December 31, 2021 | $ | ( | $ | $ | ( | ||||||||||||
| Other Comprehensive (Loss) Income | ( | ||||||||||||||||
Balance at December 31, 2022 | ( | ( | |||||||||||||||
| Other Comprehensive Loss | ( | ( | ( | ||||||||||||||
Balance at | $ | ( | $ | $ | ( | ||||||||||||
Weatherford International plc – 2023 Form 10-K | 72
Table of Contents Item 8 | Notes to the Consolidated Financial Statements
15 – Income (Loss) per Share
A reconciliation of the number of weighted average shares used for the basic and diluted income (loss) per share calculation for the periods presented was as follows:
| Year Ended December 31, | |||||||||||
| (Shares in millions) | 2023 | 2022 | 2021 | ||||||||
| Net Income (Loss) Attributable to Weatherford | $ | $ | $ | ( | |||||||
| Basic Weighted Average Shares Outstanding | |||||||||||
| Dilutive Effect of Awards Granted in Stock Incentive Plans | |||||||||||
| Diluted Weighted Average Shares Outstanding | |||||||||||
| Basic Income (Loss) Per Share Attributable to Weatherford | $ | $ | $ | ( | |||||||
| Diluted Income (Loss) Per Share Attributable to Weatherford | $ | $ | $ | ( | |||||||
Antidilutive Weighted Average Shares: | |||||||||||
| Warrants | |||||||||||
Equity Awards | |||||||||||
Total Antidilutive Weighted Average Shares | |||||||||||
Basic income (loss) per share for all periods presented equals net income (loss) divided by our weighted average shares outstanding during the period. Diluted income (loss) per share is computed by dividing net income (loss) by our weighted average shares outstanding during the period including potential dilutive ordinary shares. Our basic and dilutive weighted average shares outstanding for the period presented with a net loss are equivalent as the inclusion of potential dilutive securities is antidilutive. Antidilutive shares represent securities that could dilute income (loss) per share, which are excluded from the computation as their impact was antidilutive.
As discussed in “Note 14 – Shareholders’ Equity”, warrants to purchase 7.8 million ordinary shares at $99.96 per share were issued on December 13, 2019 and expired on December 13, 2023. The warrants were excluded from the diluted weighted average shares outstanding as the exercise price of the warrants was greater than the average market price of the Company’s ordinary shares.
Weatherford International plc – 2023 Form 10-K | 73
Table of Contents Item 8 | Notes to the Consolidated Financial Statements
16 – Income Taxes
We provide for income taxes based on the laws and rates in effect in the countries in which operations are conducted, or in which we or our subsidiaries are considered resident for income tax purposes. The relationship between our pre-tax income or loss and our income tax provision or benefit varies from period to period as a result of various factors which include changes in total pre-tax income or loss, the jurisdictions in which our income is earned, the tax laws in those jurisdictions and in our operating structure.
Our income tax provision consisted of the following:
| Year Ended December 31, | |||||||||||
| (Dollars in millions) | 2023 | 2022 | 2021 | ||||||||
| Total Current Provision | $ | ( | $ | ( | $ | ( | |||||
| Total Deferred (Provision) Benefit | ( | ||||||||||
| Income Tax Provision | $ | ( | $ | ( | $ | ( | |||||
The difference between the Irish income tax provision and the consolidated income tax provision is analyzed below:
| Year Ended December 31, | |||||||||||
| (Dollars in millions) | 2023 | 2022 | 2021 | ||||||||
Irish Income Tax (Provision) Benefit Tax Rate of 25% | $ | ( | $ | ( | $ | ||||||
| Tax Provision on Operating Earnings/Losses Subject to Rates Different than the Irish Income Tax Rate | ( | ( | |||||||||
Tax (Provision) Benefit on Swiss Loss from internal liquidation of subsidiary and internal restructuring | ( | ||||||||||
Decrease (Increase) in Valuation Allowance attributed to Swiss Loss and internal restructuring | ( | ( | |||||||||
Decrease (Increase) in Valuation Allowance on Operating Earnings/Losses | |||||||||||
| Change in Uncertain Tax Positions | ( | ( | |||||||||
| Income Tax Provision | $ | ( | $ | ( | $ | ( | |||||
Our income tax provisions generally do not correlate to our consolidated income (loss) before tax. Our income tax provisions are primarily driven by profits in certain jurisdictions, deemed profit countries and withholding taxes on intercompany and third-party transactions that do not directly correlate to ordinary income or loss. Certain charges and impairments recognized do not result in significant tax benefit as a result of being attributed to a non-income tax jurisdiction or our inability to forecast realization of the tax benefit of such losses.
For the year ended December 31, 2023, income tax expense was lower by $93 million, due to the release of valuation allowances where deferred tax assets are now considered more likely than not to be realized in the future, and $22 million, due to the recognition of a benefit from previously uncertain tax positions throughout the year. Those benefits were offset by the establishment of valuation allowances of approximately $50 million against the loss on the sale of Blue Chip Swap securities and currency devaluation in Argentina (see Note 17 – Blue Chip Swap Securities - Argentina). During the year ended December 31, 2022, income tax expense was lower by $35 million, due to the release of valuation allowances and $27 million, due to the recognition of a benefit from previously uncertain tax positions.
Deferred tax assets and liabilities are recognized for the estimated future tax effects of temporary differences between the tax basis of an asset or liability and its reported amount in the Consolidated Financial Statements. The measurement of deferred tax assets and liabilities is based on enacted tax laws and rates currently in effect in each of the jurisdictions in which we have operations.
Weatherford International plc – 2023 Form 10-K | 74
Table of Contents Item 8 | Notes to the Consolidated Financial Statements
The components of the net deferred tax asset were as follows:
| December 31, | December 31, | |||||||
| (Dollars in millions) | 2023 | 2022 | ||||||
| Deferred Tax Assets: | ||||||||
| Net Operating Losses Carryforwards | $ | $ | ||||||
| Unused Recognized Built in Losses | ||||||||
| Accrued Liabilities and Reserves | ||||||||
| Tax Credit Carryforwards | ||||||||
| Employee Benefits | ||||||||
| Property, Plant and Equipment | ||||||||
| Inventory | ||||||||
| U.S. Interest Deferral | ||||||||
Tax Base Adjustment | ||||||||
| State Deferred | ||||||||
| Other Differences between Financial and Tax Basis | ||||||||
| Valuation Allowance | ( | ( | ||||||
| Total Deferred Tax Assets | ||||||||
| Deferred Tax Liabilities: | ||||||||
| Intangible Assets | ( | ( | ||||||
| Total Deferred Tax Liabilities | ( | ( | ||||||
| Net Deferred Tax Asset | $ | $ | ||||||
We record deferred tax assets for net operating losses and temporary differences between the book and tax basis of assets and liabilities that are expected to produce tax deductions in future periods. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income in the appropriate tax jurisdiction during the periods in which those deferred tax assets would be deductible. The Company assesses the realizability of its deferred tax assets each period by considering whether it is more likely than not that all or a portion of the deferred tax assets will not be realized. The Company considers all available evidence (both positive and negative) when determining whether a valuation allowance is required, with emphasis on our past operating results, the existence of cumulative losses in the most recent years and our forecast of near- term taxable income. The Company evaluates possible sources of taxable income that may be available to realize the benefit of deferred tax assets, including projected future taxable income, the reversal of existing temporary differences, taxable income in carryback years and available tax planning strategies, in making this assessment.
The valuation allowance increased by $16 million in 2023. Approximately $11 million of the increase was recorded to tax expense and was primarily attributable to the Argentina items discussed above and the Switzerland items discussed below, offset by the release of valuation allowance and the utilization of net operating losses previously not expected to be realized against operating earnings of $20 million. The remaining $5 million of the increase in the valuation allowance was attributable to foreign currency translation.
Deferred income taxes generally have not been recognized on the cumulative undistributed earnings of our non-Irish subsidiaries because they are considered to be indefinitely reinvested. Distribution of these earnings in the form of dividends or otherwise may result in a combination of income and withholding taxes payable in various countries. As of December 31, 2023 , the pool of positive undistributed earnings of our non-Irish subsidiaries that are considered indefinitely reinvested and may be subject to tax, if distributed, amounts to approximately $1.4 billion. Due to complexities in the tax laws and the manner of repatriation, it is not practicable to estimate the unrecognized amount of deferred income taxes and the related dividend withholding taxes associated with these undistributed earnings.
Weatherford International plc – 2023 Form 10-K | 75
Table of Contents Item 8 | Notes to the Consolidated Financial Statements
At December 31, 2023 , we had approximately $3.6 billion of net operating losses (“NOLs”) in various jurisdictions. Our non-indefinite loss carryforwards, if not utilized, will mostly expire for U.S. subsidiaries from 2030 through 2037 and at various dates from 2024 through 2043 for non-U.S. subsidiaries.
Upon emergence from bankruptcy in December 2019, our U.S. subsidiaries experienced an ownership change as the Company’s emergence was considered an “ownership change” for purposes of Internal Revenue Code section 382. The Internal Revenue Code sections 382 and 383 impose limitations on the ability of a company to utilize tax attributes after experiencing an “ownership change.” As a result, we estimated our annual limitation is approximately $23 million against the utilization of our U.S. loss carryforwards and other tax attributes, including unused recognized built-in losses and U.S. interest deferral. Upon emergence, we estimated that the maximum U.S. NOLs available for utilization in the future was $713 million as of December 31, 2019.
In 2021, we executed a liquidation transaction of one of our Swiss holding companies which resulted in the forfeiture of impairment losses of $1.3 billion generated in 2020. In addition, the liquidation transaction resulted in approximately $5.6 billion of tax losses (NOLs) in Switzerland of which $3.4 billion was deemed worthless and excluded from the deferred tax table, and $2.2 billion was recorded as an NOL and included in the table as management expects to utilize those NOLs on our future tax returns. However, in addition to recording a deferred tax asset of $303 million related to the $2.2 billion tax losses, we recorded a valuation allowance against the full $303 million because it will offset future income that is otherwise exempt from tax. In 2023, we recognized a deferred tax asset of $59 million relating to a final agreement with the taxing authorities in relation to an adjustment in tax base beginning of 2021, and we recorded a $57 million valuation allowance against the deferred tax asset as it is more likely than not that a majority of it will not be realized.
A tabular reconciliation of the total amounts of uncertain tax positions at the beginning and end of the period is as follows:
| Year Ended December 31, | |||||||||||
| (Dollars in millions) | 2023 | 2022 | 2021 | ||||||||
| Balance at Beginning of Year | $ | $ | $ | ||||||||
| Additions as a Result of Tax Positions Taken During a Prior Period | |||||||||||
| Reductions as a Result of Tax Positions Taken During a Prior Period | ( | ( | ( | ||||||||
| Additions as a Result of Tax Positions Taken During the Current Period | |||||||||||
| Reductions Relating to Settlements with Taxing Authorities | ( | ( | ( | ||||||||
| Reductions as a Result of a Lapse of the Applicable Statute of Limitations | ( | ( | ( | ||||||||
| Foreign Exchange Effects | ( | ( | |||||||||
| Balance at End of Year | $ | $ | $ | ||||||||
Substantially all of the uncertain tax positions, if released in future periods, would impact our effective tax rate. Within the total balance is $37 million and $38 million as of December 31, 2023 , and 2022, respectively, that would be offset by net operating losses and other tax attributes if settled. Our income tax provision includes penalties and interest expense (benefit) on uncertain tax positions of $12 million, $(2 ) million and $17 million for years ended December 31, 2023 , 2022, and 2021, respectively. The expense of $12 million in 2023 includes $(11 ) million of interest and penalty release related to benefit from previously uncertain tax positions. The amounts in the table above exclude cumulative accrued interest and penalties of $115 million and $98 million at December 31, 2023 and 2022 respectively, which are included in other non-current liabilities.
Weatherford International plc – 2023 Form 10-K | 76
Table of Contents Item 8 | Notes to the Consolidated Financial Statements
We are subject to income tax in many of the approximately 75 countries where we operate. As of December 31, 2023 , the following table summarizes the tax years that remain subject to examination for the major jurisdictions in which we operate:
| Tax Jurisdiction | Tax Years under Examination | ||||
| Argentina | |||||
| Canada | |||||
| Mexico | |||||
| Russia | |||||
| Saudi Arabia | |||||
| Switzerland | |||||
| United States (Federal) | |||||
We are continuously under tax examination in various jurisdictions and cannot predict the timing or outcome regarding the resolutions or if they will have a material impact on our financial statements. As of December 31, 2023 , we anticipate that it is reasonably possible that the amount of uncertain tax positions may decrease by up to $13 million in the next twelve months due to expiration of statutes of limitations, settlements and/or conclusions of tax examinations.
17 – Blue Chip Swap Securities - Argentina
The functional currency for our Argentine operations is the U.S. dollar and we use Argentina’s official exchange rate to remeasure our Argentine peso-denominated net monetary assets into U.S. dollars at each balance sheet date. The Central Bank of Argentina has maintained certain currency controls that limited our ability to access U.S. dollars in Argentina and to remit cash from our Argentine operations.
18 – Subsequent Event
Weatherford International plc – 2023 Form 10-K | 77
Table of Contents Item 9 | Changes in and Disagreement with Accountants on Accounting and Financial Disclosure
Item 9. Changes in and Disagreement with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. This information is collected and communicated to management, including our Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosures. Our management, under the supervision of and with the participation of our CEO and CFO, evaluated the effectiveness of the design and operation of our disclosure controls and procedures at December 31, 2023. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of December 31, 2023.
Management’s Annual Report on Internal Control Over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rules 13a-15(f) of the Exchange Act. The Company’s internal controls are designed to provide reasonable, but not absolute, assurance as to the reliability of its financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP.
Our management, including our CEO and CFO, does not expect that our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the benefits of controls must be considered relative to their costs. Because of the inherent limitations in a system of internal control over financial reporting, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any control system is also based, in part, upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023, using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – An Integrated Framework (2013). As a result of this assessment, management concluded that as of December 31, 2023, our internal control over financial reporting was effective based on these criteria.
KPMG LLP has issued an attestation report dated February 7, 2024, on our internal control over financial reporting, which is contained in this Annual Report on Form 10-K.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting, that occurred during the fourth quarter ended December 31, 2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information.
During the three months ended December 31, 2023, no director or executive officer of the Company adopted terminated
Weatherford International plc – 2023 Form 10-K | 78
Table of Contents Item 10 | Directors, Executive Officers and Corporate Governance
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
Information incorporated by reference from our Proxy Statement for the 2024 Annual General Meeting of Shareholders. See also “Item 1. Business. Executive Officers of Weatherford” of this report.
We have adopted a code of ethics entitled “Weatherford Code of Business Conduct English,” which applies to all our employees, officers and directors. Copies of these codes can also be found at www.weatherford.com.
We intend to satisfy the requirement under Item 5.05 of Form 8-K to disclose any amendments to our Weatherford Code of Business Conduct and any waiver from any provision to it by posting such information on our website at www.weatherford.com.
Item 11. Executive Compensation.
Information incorporated by reference from our Proxy Statement for the 2024 Annual General Meeting of Shareholders.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Information incorporated by reference from our Proxy Statement for the 2024 Annual General Meeting of Shareholders.
Weatherford International plc – 2023 Form 10-K | 79
Table of Contents Item 15 | Exhibits
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Information incorporated by reference from our Proxy Statement for the 2024 Annual General Meeting of Shareholders.
Item 14. Principal Accounting Fees and Services.
Information incorporated by reference from our Proxy Statement for the 2024 Annual General Meeting of Shareholders.
PART IV
Item 15. Exhibit and Financial Statement Schedules.
(a)The following documents are filed as part of this report or incorporated by reference:
2.The financial statement schedules listed in Rule 5-04 of Regulation S-X (17 CFR 210.5-04) have been omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto.
3.The exhibits of the Company listed below under Item 15(b); all exhibits are incorporated herein by reference to a prior filing as indicated, unless designated by a dagger (†) or double dagger (††).
(b) Exhibits:
| Exhibit Number | Description | Original Filed Exhibit | File Number | |||||||||||||||||
| 3.1 | Exhibit 3.1 of the Company’s Current Report on Form 8-K filed December 18, 2019 | File No. 1-36504 | ||||||||||||||||||
| 4.1 | Exhibit 4.1 of the Company’s Annual Report on Form 10-K filed February 17, 2022 | File No. 1-36504 | ||||||||||||||||||
| 4.2 | Exhibit 4.1 of the Company’s Current Report on Form 8-K filed December 18, 2019 | File No. 1-36504 | ||||||||||||||||||
| 4.3 | Included in Exhibit 4.1 of the Company’s Current Report on Form 8-K filed December 18, 2019 | File No. 1-36504 | ||||||||||||||||||
| 4.4 | Exhibit 4.1 of the Company’s Current Report on Form 8-K filed August 28, 2020 | File No. 1-36504 | ||||||||||||||||||
| 4.5 | Included in Exhibit 4.1 of the Company’s Current Report on Form 8-K filed August 28, 2020 | File No. 1-36504 | ||||||||||||||||||
Weatherford International plc – 2023 Form 10-K | 80
| Exhibit Number | Description | Original Filed Exhibit | File Number | |||||||||||||||||
| 4.6 | Exhibit 4.1 of the Company’s Current Report on Form 8-K filed September 30, 2021 | File No. 1-36504 | ||||||||||||||||||
| 4.7 | Included in Exhibit 4.1 of the Company’s Current Report on Form 8-K filed September 30, 2021 | File No. 1-36504 | ||||||||||||||||||
| 4.8 | Exhibit 4.1 of the Company’s Current Report on Form 8-K filed October 27, 2021 | File No. 1-36504 | ||||||||||||||||||
4.9 | Included in Exhibit 4.1 of the Company’s Current Report on Form 8-K filed October 27, 2021 | File No. 1-36504 | ||||||||||||||||||
| 4.10 | Exhibit 4.2 of the Company’s Current Report on Form 8-K filed December 5, 2022 | File No. 1-36504 | ||||||||||||||||||
| 4.11 | Exhibit 4.1 of the Company’s Current Report on Form 8-K filed April 20, 2023 | File No. 1-36504 | ||||||||||||||||||
*10.1 | Exhibit 10.6 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed February 8, 2023 | File No. 1-36504 | ||||||||||||||||||
*10.2 | Exhibit 10.11 of the Company’s Current Report on Form 8-K12B filed June 17, 2014 | File No. 1-36504 | ||||||||||||||||||
*10.3 | Exhibit 10.12 of the Company’s Current Report on Form 8-K12B filed June 17, 2014 | File No. 1-36504 | ||||||||||||||||||
Weatherford International plc – 2023 Form 10-K | 81
| Exhibit Number | Description | Original Filed Exhibit | File Number | |||||||||||||||||
*10.4 | Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on January 23, 2023 | File No. 1-36504 | ||||||||||||||||||
*10.5 | Exhibit 10.10 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed February 8, 2023 | File No. 1-36504 | ||||||||||||||||||
*10.6 | Exhibit 10.11 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed February 8, 2023 | File No. 1-36504 | ||||||||||||||||||
*10.7 | Exhibit 10.2 of the Company’s Current Report on Form 8-K filed April 15, 2020 | File No. 1-36504 | ||||||||||||||||||
*10.8 | Exhibit 10.8 of the Company’s Current Report on Form 8-K filed December 18, 2019 | File No. 1-36504 | ||||||||||||||||||
*10.9 | Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the period ending June 30, 2020 filed August 14, 2020 | File No. 1-36504 | ||||||||||||||||||
*10.10 | Exhibit 10.6 of the Company’s Quarterly Report on Form 10-Q for the period ending September 30, 2020 filed November 4, 2020 | File No. 1-36504 | ||||||||||||||||||
*10.11 | Exhibit 10.2 of the Company’s Current Report on Form 8-K filed January 23, 2023 | File No. 1-36504 | ||||||||||||||||||
*10.12 | Exhibit 10.8 of the Company’s Quarterly Report on Form 10-Q for the period ending September 30. 2021 filed November 2, 2021 | File No. 1-36504 | ||||||||||||||||||
Weatherford International plc – 2023 Form 10-K | 82
| Exhibit Number | Description | Original Filed Exhibit | File Number | |||||||||||||||||
*10.13 | Exhibit 10.26 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. filed February 8, 2023 | File No. 1-36504 | ||||||||||||||||||
*10.14 | Exhibit 10.1 of the Company’s Current Report on Form 8-K filed January 20, 2022 | File No. 1-36504 | ||||||||||||||||||
*10.15 | Exhibit 10.2 of the Company’s Current Report on Form 8-K filed January 20, 2022 | File No. 1-36504 | ||||||||||||||||||
*10.16 | Exhibit 10.3 of the Company’s Current Report on Form 8-K filed January 20, 2022 | File No. 1-36504 | ||||||||||||||||||
*10.17 | Exhibit 10.3 of the Company’s Current Report on Form 8-K filed January 23, 2023 | File No. 1-36504 | ||||||||||||||||||
*10.18 | Exhibit 10.4 of the Company’s Current Report on Form 8-K filed January 23, 2023 | File No. 1-36504 | ||||||||||||||||||
*10.19 | Exhibit 10.5 of the Company’s Current Report on Form 8-K filed January 23, 2023 | File No. 1-36504 | ||||||||||||||||||
†*10.20 | ||||||||||||||||||||
†*10.21 | ||||||||||||||||||||
†*10.22 | ||||||||||||||||||||
10.23 | Exhibit 10.2 of the Company’s Current Report on Form 8-K filed December 18, 2019 | File No. 1-36504 | ||||||||||||||||||
Weatherford International plc – 2023 Form 10-K | 83
| Exhibit Number | Description | Original Filed Exhibit | File Number | |||||||||||||||||
10.24 | Exhibit 10.1 of the Company’s Current Report on Form 8-K filed August 28, 2020 | File No. 1-36504 | ||||||||||||||||||
10.25 | Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on September 20, 2021 | File No. 1-36504 | ||||||||||||||||||
10.26 | Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on October 18, 2022 | File No. 1-36504 | ||||||||||||||||||
10.27 | Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on November 28, 2022 | File No. 1-36504 | ||||||||||||||||||
10.28 | Exhibit 10.2 of the Company’s Current Report on Form 8-K filed on November 28, 2022 | File No. 1-36504 | ||||||||||||||||||
10.29 | Exhibit 10.3 of the Company’s Current Report on Form 8-K filed on November 28, 2022 | File No. 1-36504 | ||||||||||||||||||
10.30 | Exhibit 10.44 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed February 8, 2023 | File No. 1-36504 | ||||||||||||||||||
Weatherford International plc – 2023 Form 10-K | 84
| Exhibit Number | Description | Original Filed Exhibit | File Number | |||||||||||||||||
10.31 | Exhibit 10.1 of the Company’s Current Report on Form 8-K filed March 24, 2023 | File No. 1-36504 | ||||||||||||||||||
10.32 | Exhibit 10.1 of the Company’s Current Report on Form 8-K filed October 24, 2023 | File No. 1-36504 | ||||||||||||||||||
†10.33 | Fifth Amendment to Amended and Restated Credit Agreement, dated as of December 20, 2023, by and among Weatherford International Ltd., Weatherford International, LLC, Weatherford Canada Ltd. WOFS International Finance GmbH, Weatherford International plc, the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent. | |||||||||||||||||||
10.34 | Exhibit 10.3 of the Company’s Current Report on Form 8-K filed December 18, 2019 | File No. 1-36504 | ||||||||||||||||||
10.35 | Exhibit 10.3 of the Company’s Current Report on Form 8-K filed August 28, 2020 | File No. 1-36504 | ||||||||||||||||||
10.36 | Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the period ending September 30. 2021 filed November 2, 2021 | File No. 1-36504 | ||||||||||||||||||
10.37 | Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q for the period ending September 30. 2021 filed November 2, 2021 | File No. 1-36504 | ||||||||||||||||||
10.38 | Exhibit 10.5 of the Company’s Current Report on Form 8-K filed December 18, 2019 | File No. 1-36504 | ||||||||||||||||||
Weatherford International plc – 2023 Form 10-K | 85
| Exhibit Number | Description | Original Filed Exhibit | File Number | |||||||||||||||||
†*10.39 | ||||||||||||||||||||
†19 | ||||||||||||||||||||
| †21.1 | ||||||||||||||||||||
| †23.1 | ||||||||||||||||||||
| †31.1 | ||||||||||||||||||||
| †31.2 | ||||||||||||||||||||
| ††32.1 | ||||||||||||||||||||
| ††32.2 | ||||||||||||||||||||
†97 | ||||||||||||||||||||
| †101.INS | XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document | |||||||||||||||||||
| †101.SCH | XBRL Taxonomy Extension Schema Document | |||||||||||||||||||
| †101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||||||||||||||
| †101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |||||||||||||||||||
| †101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |||||||||||||||||||
| †101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||||||||||||||
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | |||||||||||||||||||
* Management contract or compensatory plan or arrangement.
† Filed herewith.
†† Furnished herewith.
As permitted by Item 601(b)(4)(iii)(A) of Regulation S-K, the Company has not filed with this Annual Report on Form 10-K certain instruments defining the rights of holders of long-term debt of the Company and its subsidiaries because the total amount of securities authorized under any of such instruments does not exceed 10% of the total assets of the Company and its subsidiaries on a consolidated basis. We will furnish a copy of any of such instruments to the Securities and Exchange Commission upon request. We will furnish to any requesting shareholder a copy of any of the above named exhibits upon the payment of our reasonable expenses of obtaining, duplicating and mailing the requested exhibits. All requests for copies of exhibits should be made in writing to our U.S. Investor Relations Department at 2000 St James Place, Houston, TX 77056.
Item 16. Form 10-K Summary.
None.
Weatherford International plc – 2023 Form 10-K | 86
SIGNATURES
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Girishchandra K. Saligram and Arunava Mitra and each of them, individually, his or her true and lawful agent, proxy and attorney-in-fact, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitutes, may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Weatherford International plc
/s/ Girishchandra K. Saligram
Girishchandra K. Saligram
President, Chief Executive Officer and Director
(Principal Executive Officer)
Date: February 7, 2024
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
| Signatures | Title | Date | ||||||
| /s/ Girishchandra K. Saligram | President, Chief Executive Officer and Director | February 7, 2024 | ||||||
| Girishchandra K. Saligram | (Principal Executive Officer) | |||||||
| /s/ Arunava Mitra | Executive Vice President and | February 7, 2024 | ||||||
| Arunava Mitra | Chief Financial Officer | |||||||
| (Principal Financial Officer) | ||||||||
| /s/ Desmond J. Mills | Senior Vice President and Chief Accounting Officer | February 7, 2024 | ||||||
| Desmond J. Mills | (Principal Accounting Officer) | |||||||
| /s/ Charles M. Sledge | Chairman of the Board and Director | February 7, 2024 | ||||||
| Charles M. Sledge | ||||||||
| /s/ Benjamin C. Duster IV | Director | February 7, 2024 | ||||||
| Benjamin C. Duster IV | ||||||||
| /s/ Neal P. Goldman | Director | February 7, 2024 | ||||||
| Neal P. Goldman | ||||||||
| /s/ Jacqueline Mutschler | Director | February 7, 2024 | ||||||
| Jacqueline Mutschler | ||||||||
Weatherford International plc – 2023 Form 10-K | 87
WEATHERFORD INTERNATIONAL PLC
AMENDED AND RESTATED RESTRICTED SHARE UNIT AWARD AGREEMENT
PURSUANT TO THE
THIRD AMENDED AND RESTATED 2019 EQUITY INCENTIVE PLAN
(TIME VESTING)
* * * * *
Participant:________________
Grant Date:
Number of Restricted Share Units Granted: __________
* * * * *
THIS RESTRICTED SHARE UNIT AWARD AGREEMENT (this “Agreement”), dated as of the Grant Date specified above, is entered into by and between WEATHERFORD INTERNATIONAL PLC, a public limited company organized under the laws of Ireland (the “Company”), and you as the Participant specified below, pursuant to the Weatherford International plc Third Amended and Restated 2019 Equity Incentive Plan, as in effect and as amended from time to time (the “Plan”), which is administered by the Committee (as defined in the Plan); and
WHEREAS, it has been determined under the Plan that it would be in the best interests of the Company to grant the Restricted Share Units (“RSUs”) provided herein to the Participant.
NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby mutually covenant and agree as follows:
1.Incorporation By Reference; Plan Document Receipt. This Agreement is subject in all respects to the terms and provisions of the Plan (including, without limitation, any amendments thereto adopted at any time and from time to time unless such amendments are expressly intended not to apply to the Award provided hereunder), all of which terms and provisions are made a part of and incorporated into this Agreement as if they were each expressly set forth herein. This Agreement, together with the Plan, contains the entire agreement between the parties hereto with respect to the subject matter contained herein, and supersedes all prior agreements or prior understandings, whether written or oral, between the parties relating to such subject matter. Except as provided otherwise herein, any capitalized term not defined in this Agreement shall have the same meaning as is ascribed thereto in the Plan. The Participant hereby
#1314156v1
acknowledges receipt of a true copy of the Plan and that the Participant has read the Plan carefully and fully understands its content. In the event of any conflict between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control.
2.Grant of Restricted Share Unit Award. The Company hereby grants the number of RSUs specified above, as of the Grant Date stated above. Except as otherwise provided by the Plan, the Participant agrees and understands that nothing contained in this Agreement provides, or is intended to provide, the Participant with any protection against potential future dilution of the Participant’s interest in the Company for any reason, and no adjustments shall be made for dividends in cash or other property, distributions or other rights in respect of the Shares underlying the RSUs, except as otherwise specifically provided for in the Plan or this Agreement.
3.Vesting.
(a)Subject to the provisions of this Section 3, the RSUs subject to this Award shall become vested as follows, provided that the Participant has not incurred a termination of Service prior to each such vesting date (each, a “Vesting Date”):
[Vesting Date | Percentage of RSUs | ||||
First Anniversary of the Grant Date | [•]% | ||||
Second Anniversary of the Grant Date | [•]% | ||||
| Third Anniversary of the Grant Date | [•]%] | ||||
There shall be no proportionate or partial vesting in the periods prior to each Vesting Date and all vesting shall occur only on the appropriate Vesting Date, subject to the Participant’s continued service with the Company or any of its Subsidiaries on each applicable Vesting Date.
(b)Termination Without Cause; Resignation for Good Reason; Due to Death or Disability. Subject to Section 4(b), in the event the Participant’s Service is terminated by the Company without Cause or by the Participant for Good Reason (each, as defined in the Company’s Change in Control Severance Plan), all unvested RSUs shall become vested on each Vesting Date as if the Participant had not incurred a termination of Service prior to the applicable Vesting Date. Subject to Section 4(b), in the event the Participant’s Service is terminated due to the Participant’s death or Disability, all unvested RSUs shall become fully vested as of the time immediately prior to such termination of Service, all remaining forfeiture restrictions shall immediately lapse as of the Vesting Date and the Vesting Date shall be deemed to be the date of such termination of Service.
#1314156v1
(c)Termination due to Retirement. Subject to Section 4(b), in the event the Participant’s Service is terminated by the Participant due to Retirement and the Participant’s date of termination due to Retirement occurs on or after the 11th month anniversary of the Grant Date, all unvested RSUs shall continue to vest pursuant to Section 3(a) as though the Participant was fully employed through each Vesting Date. For purposes of this Section 3(c), “Retirement” means the Participant’s voluntary termination of Service after attainment of age 60, with at least ten years of Service and at least six months’ prior written notice to the Company.
(d)Change in Control. Subject to Section 4(b), if a Change in Control occurs, and the successor or purchaser in the Change in Control has assumed the Company’s obligations with respect to the RSUs or provided a substitute award and the Participant has a Qualifying Termination (as defined in the Company’s Change in Control Severance Plan), the RSUs shall become fully vested as of the time immediately prior to such termination of Service, all remaining forfeiture restrictions shall immediately lapse as of the Vesting Date and the Vesting Date shall be deemed to be the date of such termination of Service; provided that if such Qualifying Termination occurs prior to a Change in Control, then the RSUs shall become fully vested as of the time immediately prior to such Change in Control, all remaining forfeiture restrictions shall immediately lapse as immediately prior to such Change in Control and the Vesting Date shall be deemed to be the date of such Change in Control.
(e)Committee Discretion to Accelerate Vesting. In addition to the foregoing, the Committee may, in its sole discretion, accelerate vesting of the RSUs at any time and for any reason.
(f)Forfeiture. Subject to the terms of this Section 3, all unvested RSUs (taking into account any vesting that may occur upon the Participant’s termination of Service in accordance with Section 3(b) or (c) hereof) shall be immediately forfeited upon the Participant’s termination of Service for any reason.
4.Delivery of Shares.
(a)General. Subject to the requirements of Section 409A of the Code, within ten days following the applicable Vesting Date of the RSUs the Participant shall receive the number of Shares that correspond to the number of RSUs that have become vested on the applicable Vesting Date, less any shares withheld by the Company for tax withholding purposes; provided, that, a Participant who (i) is a “specified employee” (within the meaning of Section 409A) on the date his or her “separation from service” (within the meaning of Section 409A) and (ii) who continues to vest due to Retirement pursuant to Section 3(c), shall have settlement under this Section 4(a) delayed to the date that is the first day of the seventh month following Participant’s separation from service, to the extent required by Section 409A.
(b)Release. The receipt of Shares subject to the RSUs that are eligible to vest pursuant to Section 3(b), (c) or (d) shall be subject to the execution and nonrevocation of a general release of claims in favor of the Company, in a form reasonably satisfactory to the Company.
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By signing below, the Participant hereby acknowledges receipt of the RSUs issued on the Grant Date indicated above, which have been issued under the terms and conditions of the Plan and this Agreement.
WEATHERFORD INTERNATIONAL PLC
By:
Name:
Title:
Accepted by:
[Name of the Participant]
Date:
#1314156v1
WEATHERFORD INTERNATIONAL PLC
AMENDED AND RESTATED PERFORMANCE RESTRICTED SHARE UNIT AWARD AGREEMENT
PURSUANT TO THE
THIRD AMENDED AND RESTATED 2019 EQUITY INCENTIVE PLAN
(PERFORMANCE VESTING)
* * * * *
Participant:________________
Grant Date:________________
Number of Restricted Share Units Granted: __________
* * * * *
THIS PERFORMANCE RESTRICTED SHARE UNIT AWARD AGREEMENT (this “Agreement”), dated as of the Grant Date specified above, is entered into by and between WEATHERFORD INTERNATIONAL PLC, a public limited company organized under the laws of Ireland (the “Company”), and you as the Participant specified below, pursuant to the Weatherford International plc Third Amended and Restated 2019 Equity Incentive Plan, as in effect and as amended from time to time (the “Plan”), which is administered by the Committee (as defined in the Plan); and
WHEREAS, it has been determined under the Plan that it would be in the best interests of the Company to grant the Performance Restricted Share Units (“PSUs”) provided herein to the Participant.
NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby mutually covenant and agree as follows:
1.Incorporation By Reference; Plan Document Receipt. This Agreement is subject in all respects to the terms and provisions of the Plan (including, without limitation, any amendments thereto adopted at any time and from time to time unless such amendments are expressly intended not to apply to the Award provided hereunder), all of which terms and provisions are made a part of and incorporated into this Agreement as if they were each expressly set forth herein. This Agreement, together with the Plan, contains the entire agreement between the parties hereto with respect to the subject matter contained herein, and supersedes all prior agreements or prior understandings, whether written or oral, between the parties relating to such subject matter. Except as provided otherwise herein, any capitalized term not defined in this
Agreement shall have the same meaning as is ascribed thereto in the Plan and the “Performance Period” shall mean the [two][three]1 fiscal-year period commencing on the first day of the fiscal year of the Company in which the Grant Date occurs. The Participant hereby acknowledges receipt of a true copy of the Plan and that the Participant has read the Plan carefully and fully understands its content. In the event of any conflict between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control.
2.Grant of Performance Restricted Share Unit Award. The Company hereby grants the target number of PSUs specified above, as of the Grant Date stated above (the “Target Award”). Except as otherwise provided by the Plan, the Participant agrees and understands that nothing contained in this Agreement provides, or is intended to provide, the Participant with any protection against potential future dilution of the Participant’s interest in the Company for any reason, and no adjustments shall be made for dividends in cash or other property, distributions or other rights in respect of the Shares underlying the PSUs, except as otherwise specifically provided for in the Plan or this Agreement.
3.Vesting.
(a)Subject to the provisions of this Section 3, the PSUs subject to this Agreement shall be eligible to vest on the last day of the Performance Period, subject to the Participant’s continued Service with the Company on such date.
(i)The actual number of PSUs that are earned, if any, pursuant to the terms and conditions of this Agreement is subject to increase or decrease based on the Company’s actual performance against the Performance Goals set forth on Exhibit A and may range from [0% to []%] of the Target Award, rounded to the nearest whole Share.
(ii)Following the end of the Performance Period and no later than 60 days thereafter, the Committee will determine the number of PSUs that have been earned (the “Earned PSUs”) in accordance with Exhibit A (such date, the “Determination Date”).
(b)Termination without Cause; for Good Reason; Due to Death or Disability. Subject to Section 4(b), in the event the Participant’s Service is terminated by the Company without Cause or by the Participant for Good Reason (each, as defined in the Company’s Change in Control Severance Plan during the [second][third] year of the Performance Period [, notwithstanding the definitions contained the Participant’s Offer Letter from the Company]2), a pro-rated portion of the Award shall remain eligible to vest at the end of the Performance Period based on actual performance, with such pro-rated portion, if any, determined by multiplying the number of Earned PSUs by a fraction, the numerator of which is the number of days elapsed from the Grant Date through the Participant’s date of termination, and the denominator of which is the number of days in the Performance Period. For the avoidance of doubt, in the event the Participant’s Service is terminated by the Company without Cause prior to the commencement of the [second][third] year of the Performance Period, the PSUs shall be immediately forfeited. Subject to Section 4(b), in the event the Participant’s Service is terminated due to the Participant’s death or Disability, the Shares subject to the PSUs that have not yet vested shall become earned and vested at the end of the Performance Period based on actual performance.
1 Note to Draft: Insert applicable performance period.
2 Note to Draft: For the CEO only.
(c)Termination due to Retirement. Subject to Section 4(b), in the event the Participant’s Service is terminated by the Participant due to Retirement and the Participant’s date of termination due to Retirement occurs on or after the 11th month anniversary of the Grant Date, a pro-rated portion of the Award shall remain eligible to vest at the end of the Performance Period based on actual performance, with such pro-rated portion, if any, determined by multiplying the number of Earned PSUs by a fraction, the numerator of which is the number of days elapsed from the Grant Date through the Participant’s date of termination due to Retirement, and the denominator of which is the number of days in the Performance Period. For the avoidance of doubt, in the event the Participant’s termination of Service due to Retirement occurs prior to the 11th month anniversary of the Grant Date, the PSUs shall be immediately forfeited. For purposes of this Section 3(c), “Retirement” means the Participant’s voluntary termination of Service after attainment of age 60, with at least ten years of Service and at least six months’ prior written notice to the Company.
(d)Change in Control. Subject to Section 4(b), and not withstanding Section 3(b) or (c), if a Change in Control occurs, the successor or purchaser in the Change in Control has assumed the Company’s obligations with respect to the PSUs or provided a substitute award and the Participant (i) has a Qualifying Termination (as defined in the Company’s Change in Control Severance Plan) or (ii) remains employed with the Company through the end of the Performance Period, then the PSUs shall become earned and vested as of the time immediately prior to the earlier of the Qualifying Termination and the Change in Control (y) at Target achievement of the Performance Goals, if the Change in Control occurs within 12 months following the Grant Date hereunder, or (z) at the greater of Target achievement or the actual achievement of the Performance Goals through the date of the Change in Control, if such Change in Control occurs on or after 12 months following the Grant Date hereunder; provided that if such Qualifying Termination occurs prior to a Change in Control, then the PSUs shall become earned and vested as of the time immediately prior to the Qualifying Termination at the greater of Target achievement or the actual achievement of the Performance Goals through the date of such Change in Control.
(e)Committee Discretion to Accelerate Vesting. In addition to the foregoing, the Committee may, in its sole discretion, accelerate vesting of the PSUs at any time and for any reason.
(f)Forfeiture. Subject to the terms of this Section 3, all unvested PSUs (taking into account any vesting that may occur upon the Participant’s termination of Service in accordance with Section 3 hereof) shall be immediately forfeited upon the Participant’s termination of Service for any reason.
4.Delivery of Shares.
(a)General. Subject to the requirements of Section 409A of the Code, on the Determination Date (and no later than the 15th day of the third month following the end of the Performance Period), the Participant shall receive the number of Shares that correspond to the number of Earned PSUs, less any shares withheld by the Company for tax withholding purposes; provided, that, a Participant who (i) is a “specified employee” (within the meaning of Section 409A) on the date his or her “separation from service” (within the meaning of Section 409A) and (ii) who continues to vest due to Retirement pursuant to Section 3(c), shall have settlement under
this Section 4(a) delayed to the date that is the first day of the seventh month following Participant’s separation from service, to the extent required by Section 409A.
(b)Release. The receipt of Shares subject to the Earned PSUs that are eligible to vest pursuant to Section 3(b), (c) or (d) shall be subject to the execution and nonrevocation of a general release of claims in favor of the Company, in a form reasonably satisfactory to the Company.
[Remainder of Page Intentionally Left Blank]
By signing below, the Participant hereby acknowledges receipt of the PSUs issued on the Grant Date indicated above, which have been issued under the terms and conditions of the Plan and this Agreement.
WEATHERFORD INTERNATIONAL PLC
By:
Name:
Title:
Accepted by:
[Name of the Participant]
Date:
WEATHERFORD INTERNATIONAL PLC
AMENDED AND RESTATED RESTRICTED SHARE UNIT AWARD
AGREEMENT
PURSUANT TO THE
THIRD AMENDED AND RESTATED 2019 EQUITY INCENTIVE PLAN
(TIME VESTING)
* * * * *
Participant:________________
Grant Date:
Number of Restricted Share Units Granted: __________
* * * * *
THIS RESTRICTED SHARE UNIT AWARD AGREEMENT (this “Agreement”), dated as of the Grant Date specified above, is entered into by and between WEATHERFORD INTERNATIONAL PLC, a public limited company organized under the laws of Ireland (the “Company”), and you as the Participant specified below, pursuant to the Weatherford International plc Third Amended and Restated 2019 Equity Incentive Plan, as in effect and as amended from time to time (the “Plan”), which is administered by the Committee (as defined in the Plan); and
WHEREAS, it has been determined under the Plan that it would be in the best interests of the Company to grant the Restricted Share Units (“RSUs”) provided herein to the Participant.
NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby mutually covenant and agree as follows:
1.Incorporation By Reference; Plan Document Receipt. This Agreement is subject in all respects to the terms and provisions of the Plan (including, without limitation, any amendments thereto adopted at any time and from time to time unless such amendments are expressly intended not to apply to the Award provided hereunder), all of which terms and provisions are made a part of and incorporated into this Agreement as if they were each expressly set forth herein. This Agreement, together with the Plan, contains the entire agreement between the parties hereto with respect to the subject matter contained herein, and supersedes all prior agreements or prior understandings, whether written or oral, between the parties relating to such subject matter. Except as provided otherwise herein, any capitalized term not defined in this Agreement shall have the same meaning as is ascribed thereto in the Plan. The Participant hereby
#1314154v1
acknowledges receipt of a true copy of the Plan and that the Participant has read the Plan carefully and fully understands its content. In the event of any conflict between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control.
2.Grant of Restricted Share Unit Award. The Company hereby grants the number of RSUs specified above, as of the Grant Date stated above. Except as otherwise provided by the Plan, the Participant agrees and understands that nothing contained in this Agreement provides, or is intended to provide, the Participant with any protection against potential future dilution of the Participant’s interest in the Company for any reason, and no adjustments shall be made for dividends in cash or other property, distributions or other rights in respect of the Shares underlying the RSUs, except as otherwise specifically provided for in the Plan or this Agreement.
3.Vesting.
(a)Subject to the provisions of this Section 3, the RSUs subject to this Award shall become vested as follows, provided that the Participant has not incurred a termination of Service prior to each such vesting date (each, a “Vesting Date”):
| Vesting Date | Percentage of RSUs | ||||
| First Anniversary of the Grant Date | 100% | ||||
(b)Termination Without Cause; Failure to be Re-elected; Due to Death or Disability. Subject to Section 4(b), in the event the Participant’s Service is terminated by the Company without Cause or as a result of any failure to be re-elected to the Board for any reason other than for Cause or Participant’s voluntary resignation from the Board or refusal to stand for re-election, all unvested RSUs shall become vested on the Vesting Date as if the Participant had not incurred a termination of Service prior to the Vesting Date. Subject to Section 4(b), in the event the Participant’s Service is terminated due to the Participant’s death or Disability, all unvested RSUs shall become fully vested as of the time immediately prior to such termination of Service, all remaining forfeiture restrictions shall immediately lapse as of the Vesting Date and the Vesting Date shall be deemed to be the date of such termination of Service.
(c)Change in Control. Subject to Section 4(b), all unvested RSUs shall become fully vested upon a Change in Control.
(d)Committee Discretion to Accelerate Vesting. In addition to the foregoing, the Committee may, in its sole discretion, accelerate vesting of the RSUs at any time and for any reason.
(e)Forfeiture. Subject to the terms of this Section 3, all unvested RSUs (taking into account any vesting that may occur upon the Participant’s termination of Service in accordance with Section 3(b) hereof) shall be immediately forfeited upon the Participant’s termination of Service for any reason.
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4.Delivery of Shares.
(a)General. Subject to the requirements of Section 409A of the Code, within ten (10) days following the applicable Vesting Date of the RSUs the Participant shall receive the number of Shares that correspond to the number of RSUs that have become vested on the applicable Vesting Date, less any shares withheld by the Company for tax withholding purposes.
(b)Release. The receipt of Shares subject to the RSUs that are eligible to vest pursuant to Section 3(b) or (c) shall be subject to the execution and nonrevocation of a general release of claims in favor of the Company, in a form reasonably satisfactory to the Company.
[Remainder of Page Intentionally Left Blank]
#1314154v1
By signing below, the Participant hereby acknowledges receipt of the RSUs issued on the Grant Date indicated above, which have been issued under the terms and conditions of the Plan and this Agreement.
WEATHERFORD INTERNATIONAL PLC
By:
Name:
Title:
Accepted by:
[Name of the Participant]
Date:
#1314154v1
Execution Version
FIFTH AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT
This FIFTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”), dated as of December 20, 2023, is entered into among WEATHERFORD INTERNATIONAL LTD., a Bermuda exempted company (“WIL-Bermuda”), WEATHERFORD CANADA LTD., an Alberta corporation (“WIL-Canada”), WEATHERFORD INTERNATIONAL, LLC, a Delaware limited liability company (“WIL-Delaware”), WOFS INTERNATIONAL FINANCE GMBH, a Swiss limited liability company (“WIL-Switzerland” and together with WIL-Bermuda, WIL-Canada and WIL-Delaware, the “Borrowers”), WEATHERFORD INTERNATIONAL PLC, as Parent (“Parent”), WELLS FARGO BANK, NATIONAL ASSOCIATION, as administrative agent for the Lenders (the “Administrative Agent”), and the Lenders party hereto.
RECITALS
WHEREAS, the Borrowers, Parent, the Administrative Agent, and the Lenders and Issuing Banks party thereto from time to time are party to that certain Amended and Restated Credit Agreement, dated as of October 17, 2022 (as amended, supplemented or otherwise modified prior to the date hereof, the “Existing Credit Agreement”, and as amended by this Amendment and as may be further amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”);
WHEREAS, Parent and the Borrowers have requested certain amendments to Section 9.07 of the Existing Credit Agreement;
WHEREAS, subject to the terms and conditions contained herein, the Administrative Agent, the Lenders party hereto, Parent and the Borrowers have agreed to amend the Existing Credit Agreement as hereinafter set forth to address the foregoing.
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1.Defined Terms; Section References. Capitalized terms used herein but not otherwise defined herein shall have the meanings provided to such terms in the Credit Agreement.
2.Amendments to Existing Credit Agreement.
(a)The following terms are hereby added to Section 1.01 of the Existing Credit Agreement:
“Fifth Amendment” means that certain Fifth Amendment to Amended and Restated Credit Agreement, dated as of December 20, 2023, among the Borrowers, Parent, the Administrative Agent and the Lenders party thereto.
“Fifth Amendment Effective Date” has the meaning specified in the Fifth Amendment.
“Specified Swap Transaction” has the meaning assigned thereto in the annex titled “Specified Swap Transaction” dated December 20, 2023 and provided separately to the Administrative Agent and each Lender prior to the Fifth Amendment Effective Date.
US-DOCS\147150591.2
(b)Section 9.07 of the Existing Credit Agreement is hereby amended to delete the stricken text (indicated textually in the same manner as the following example: stricken text) and to add the double-underlined text (indicated textually in the same manner as the following example: double-underlined text) as set forth below:
SECTION 9.07 Swap Agreements. Parent shall not, and shall not permit any Restricted Subsidiary to, enter into any Swap Agreement, except (a) Swap Agreements entered into to hedge or mitigate risks to which Parent or any Restricted Subsidiary has actual exposure (other than those in respect of Capital Stock of Parent or any of its Restricted Subsidiaries), including to hedge or mitigate foreign currency and commodity price risks to which Parent or any Restricted Subsidiary has actual exposure, (b) Swap Agreements entered into in order to effectively cap, collar or exchange interest rates (from fixed to floating rates, from one floating rate to another floating rate or otherwise) with respect to any interest-bearing liability or investment of Parent or any Restricted Subsidiary, (c) Swap Agreements related to Permitted ESG Investments, (d) Swap Agreements related to Supply Chain Transactions, (e) any Permitted Bond Hedge Transaction, and (f) any Permitted Warrant Transaction and (g) any Specified Swap Transaction.
3.Conditions Precedent. The effectiveness of this Amendment is subject to the satisfaction, or waiver, of each of the following conditions (the date of the satisfaction or waiver of all such conditions, the “Fifth Amendment Effective Date”):
(a)The Administrative Agent shall have received duly executed counterparts of this Amendment from Parent, each of the Borrowers, the Administrative Agent and Lenders constituting at least the Required Lenders.
(b)The Borrowers shall have paid to the extent invoiced at or before 1:00 p.m., New York City time, on the Business Day immediately prior to the Fifth Amendment Effective Date, all reasonable and documented out-of-pocket expenses required to be reimbursed or paid by the Borrowers pursuant to Section 12.03 of the Credit Agreement.
The Administrative Agent is hereby authorized and directed to declare this Amendment to be effective when it has received documents confirming or certifying, to the satisfaction of the Administrative Agent, compliance with the conditions set forth in this Section 3 or the waiver of such conditions as permitted hereby. Such declaration shall be final, conclusive and binding upon all parties to the Credit Agreement (including as amended hereby) for all purposes.
4.Representations and Warranties. Parent and each of the Borrowers represents and warrants to the Administrative Agent and the Lenders that, as of the Fifth Amendment Effective Date:
(a)the representations and warranties set forth in Article VII of the Credit Agreement and in the other Loan Documents are true and correct in all material respects (except to the extent qualified by materiality or reference to Material Adverse Effect, in which case such applicable representation and warranty shall be true and correct in all respects) as of, and as if such representations and warranties were made on, the Fifth Amendment Effective Date (unless such representation and warranty expressly relates to an earlier date, in which case such representation and warranty shall continue to be true and correct in all material respects (except to the extent qualified by materiality or reference to Material Adverse Effect, in which case such applicable representation and warranty shall be true and correct in all respects) as of such earlier date);
2
US-DOCS\147150591.2
(b)no Default or Event of Default has occurred and is continuing as of the Fifth Amendment Effective Date, and
(c)this Amendment constitutes the legal, valid and binding obligation of each of the Obligors party hereto, enforceable against each such Obligor in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, rescue process or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles of general applicability.
5.Reaffirmation; Reference to and Effect on the Loan Documents.
(a)From and after the Fifth Amendment Effective Date, each reference in the Credit Agreement to “hereunder,” “hereof,” “this Agreement” or words of like import and each reference in the other Loan Documents to “Credit Agreement,” “thereunder,” “thereof” or words of like import shall, unless the context otherwise requires, mean and be a reference to the Credit Agreement as amended by this Amendment. This Amendment is a Loan Document.
(b)The Loan Documents, and the obligations of the Borrowers and the Obligors under the Loan Documents, are hereby ratified and confirmed and shall remain in full force and effect according to their terms.
(c)Each of Parent and the Borrowers, on their own behalf and on behalf of each other Obligor that is a Subsidiary thereof, (i) acknowledges and consents to all of the terms and conditions of this Amendment, (ii) affirms all of its obligations under the Loan Documents, including the Guaranty Agreements, to which it is a party, (iii) agrees that this Amendment and all documents executed in connection herewith do not operate to reduce or discharge its obligations under the Loan Documents, (iv) agrees that the Collateral Documents to which it is a party continue to be in full force and effect and are not impaired or adversely affected by this Amendment, (v) confirms its grant of security interests pursuant to the Collateral Documents to which it is a party as Collateral for the Secured Obligations and (vi) acknowledges that all Liens granted (or purported to be granted) by it pursuant to the Loan Documents remain and continue in full force and effect in respect of, and to secure, the Secured Obligations.
(d)The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender or the Administrative Agent under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents.
(e)In the event of any conflict between the terms of this Amendment and the terms of the Credit Agreement or the other Loan Documents, the terms hereof shall control.
6.Governing Law; Jurisdiction; Consent to Service of Process; Waiver of Jury Trial, Etc.
(a)This Amendment shall be construed in accordance with and governed by the law of the State of New York (whether based on contract, tort or otherwise and in law or equity), without regard to conflict of laws principles thereof to the extent such principles would cause the application of the law of another state.
(b)EACH PARTY HERETO HEREBY AGREES AS SET FORTH IN SECTION 12.15 (SUBMISSION TO JURISDICTION; CONSENT TO SERVICE OF
3
US-DOCS\147150591.2
PROCESS) AND SECTION 12.16 (WAIVER OF JURY TRIAL) OF THE CREDIT AGREEMENT AS IF SUCH SECTIONS WERE SET FORTH IN FULL HEREIN.
7.Amendments; Headings; Severability. This Amendment may not be amended nor may any provision hereof be waived except pursuant to a writing signed by the parties hereto. The Section headings used herein are for convenience of reference only, are not part of this Amendment and are not to affect the construction of, or to be taken into consideration in interpreting this Amendment. Any provision of this Amendment held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof or thereof, and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.
8.Execution in Counterparts. This Amendment may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Amendment, the Credit Agreement, the other Loan Documents and any separate letter agreements with respect to fees payable to the Administrative Agent or the Lenders constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Delivery of an executed counterpart of a signature page to this Amendment by facsimile transmission or electronic transmission (in .pdf format) shall be effective for all purposes as delivery of a manually executed counterpart of this Amendment to the extent permitted by applicable law. The words “execution”, “signed”, “signature”, “delivery”, and words of like import in or relating to any document to be signed in connection with this Amendment and the Transactions shall be deemed to include Electronic Signatures, deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
9.Specified Swap Transactions as Secured Obligations. The counterparty to the Swap Agreements to be entered into in connection with the Specified Swap Transaction is a Lender or an Affiliate of a Lender on the Fifth Amendment Effective Date, the obligations of the applicable Obligors under the Specified Swap Transaction constitute Swap Obligations and, therefore, such Swap Obligations constitute Secured Obligations in accordance with the definition thereof.
[remainder of page intentionally left blank]
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US-DOCS\147150591.2
Each of the parties hereto has caused a counterpart of this Amendment to be duly executed and delivered as of the date first above written.
BORROWERS:
WIL-BERMUDA:
WEATHERFORD INTERNATIONAL LTD.,
a Bermuda exempted company
a Bermuda exempted company
By:
Name: Maximiliano A. Kricorian
Title: Vice President and Treasurer
Name: Maximiliano A. Kricorian
Title: Vice President and Treasurer
WIL-DELAWARE:
WEATHERFORD INTERNATIONAL, LLC,
a Delaware limited liability company
a Delaware limited liability company
By:
Name: Maximiliano A. Kricorian
Title: Vice President and Treasurer
Name: Maximiliano A. Kricorian
Title: Vice President and Treasurer
WIL-CANADA:
WEATHERFORD CANADA LTD,
an Alberta corporation
an Alberta corporation
By:
Name: Pamela M. Webb
Title: Director
Name: Pamela M. Webb
Title: Director
WIL-SWITZERLAND:
WOFS INTERNATIONAL FINANCE GMBH,
a Swiss limited liability company
a Swiss limited liability company
By:
Name: Mathias Neuenschwander
Title: Managing Officer
Name: Mathias Neuenschwander
Title: Managing Officer
[Signature Page – Fifth Amendment to Amended and Restated Credit Agreement]
PARENT:
WEATHERFORD INTERNATIONAL PLC
By:
Name: Maximiliano A. Kricorian
Title: Vice President and Treasurer
Name: Maximiliano A. Kricorian
Title: Vice President and Treasurer
[Signature Page – Fifth Amendment to Amended and Restated Credit Agreement]
ADMINISTRATIVE AGENT:
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Administrative Agent and a Lender
as Administrative Agent and a Lender
By:
Name: Michael Janak
Title: Managing Director
Name: Michael Janak
Title: Managing Director
[Signature Page – Fifth Amendment to Amended and Restated Credit Agreement]
LENDERS:
[ ], as a Lender
By:
Name:
Title:
Name:
Title:
[Signature Page – Fifth Amendment to Amended and Restated Credit Agreement]
WEATHERFORD INTERNATIONAL PLC
CONFIDENTIALITY AND RESTRICTIVE COVENANT AGREEMENT
THIS CONFIDENTIALITY AND RESTRICTIVE COVENANT AGREEMENT (the “Agreement”) is made and entered into as of [●], by and among Weatherford International, PLC (the “Company”), and [●] (“Employee”). Company and Employee may sometimes be referred to individually herein as a “Party” or collectively as the “Parties”.
WITNESSTH:
WHEREAS, Employee desires to enter into this Agreement upon the terms and conditions hereafter set forth;
WHEREAS, in the continued course of Employee’s employment, the Company will disclose to the Employee and the Employee will receive certain non-public, confidential and proprietary information pertaining to the business of the Company and the Company Parties (as defined below), and the disclosure of such information to third parties, and/or the disclosure or use of that information to benefit the business of a competitor of the Company Parties, would cause grave harm to the Company Parties;
WHEREAS, Employee acknowledges and agrees that, as a condition of Employee’s participation in the Company’s severance plans, Employee must execute this Agreement, which is ancillary to the Employee’s otherwise enforceable right to participate in the such plans (subject to the terms, conditions and limitations contained in the respective plan), and that Employee’s right to participate in and Employee’s right to receive amounts under the Company’s severance plans in accordance with their terms constitutes good and sufficient consideration for this Agreement;
NOW, THEREFORE, in consideration of Employee’s continued employment with the Company, access to the Company’s goodwill and Confidential Information (as defined below), and in order to assure the confidentiality and proper use of the Confidential Information and other Company Property (as defined below), and the mutual covenants and promises contained herein, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
Section 1.Confidential Information.
1.1Except as authorized or directed by the Company in connection with the performance of Employee’s duties and obligations, Employee shall not, at any time during Employee’s employment with the Company or after Employee’s employment ends, directly or indirectly, (i) copy, disclose, utilize, exploit, or make available to any other person or entity any Confidential Information (as defined below) of any Company Party, that has come into Employee’s possession, custody, or control in the course of Employee’s employment with the Company, (ii) use any such Confidential Information for Employee’s own personal use or advantage or the use or advantage of any other person or entity other than the Company, or make any such Confidential Information available to others, or (iii) decompile, disassemble, or otherwise reverse engineer any Confidential Information or any portion thereof, or determine or attempt to determine any source code, algorithms, methods or techniques embodied in any Confidential Information (except to the extent expressly permitted by the Company in the course of Employment). Employee shall hold all Confidential Information in strict confidence and shall take the same degree of care it uses to protect its own confidential and proprietary information or material of similar nature and importance (but in no event less than reasonable care) to protect
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the confidentiality and avoid the unauthorized use, disclosure, publication, or dissemination of the Confidential Information.
1.2As used herein, “Confidential Information” means all confidential information, proprietary information or materials, trade secrets, or other non-public information (whether oral or written, whether maintained in hard copy, electronically, or otherwise) concerning, created by, or relating to any of the Company Parties, including any and all information relating to the business, assets, operations, budgets, strategies, studies, compilations, policies, procedures, organization, processes, personal information (including personal information about any current or former employees or members of the board of directors of the Company Parties or their respective family members), business developments, investment or business arrangements, negotiations, prospective or existing commercial agreements, forecasts, costs, revenues, performances, research, profiles, valuations, valuation models or analyses, profits, tax or financial structure, positions or products, financial models, financial results or analyses, other financial affairs, actual or proposed opportunities, acquisitions, transactions or investments, results, assets, current or prospective suppliers, customers, clients, investors, marketers, advertisers, vendors, current or prospective supplier, customer, or client lists (including their identity, addresses, contact persons, and/or status, preferences, strategies, or needs), internal controls, diligence or vetting process, security procedures, contingencies, marketing plans, databases, pricing, risk management, credit files, strategies, techniques, methods of operation, market consultants, computer programs, passwords, know-how, idea, process, technique, algorithm, program (whether in source code or object code form), hardware, device, schematic, drawing, formula, published or unpublished patent applications, data, information technology infrastructure, products, services, systems, designs, inventions, any information, documents, or materials related to oil and gas industry services and technology, to oil and gas industry exploration and production efforts, to oil and gas industry related contracts or agreements, to oil and gas industry drilling plans and potential drilling plans, or to areas of oil and gas field development interest, or any other information, documents, or materials that (i) may be identified as confidential or proprietary, (ii) is required to be maintained as confidential under governing law or regulation or under an agreement with any third parties, and/or (iii) would otherwise appear to a reasonable person to be confidential or proprietary. Confidential Information shall not include any information that is generally known to the public or is publicly available other than as a result of Employee’s breach of this Agreement. To the extent this Agreement is not publicly filed, this Agreement also shall be treated as Confidential Information; provided that Employee shall be permitted to disclose the terms of Paragraphs 3, 5, 6, and 7 of this Agreement to any future prospective employers, business partners, or any other person or entity to whom Employee provides (or is seeking to provide) services after the termination of Employee’s employment for the purpose of informing such person or entity of Employee’s various continuing obligations to the Company Parties. For purposes of this Agreement, (A) “Company Entities” means the Company and each and all of the Company’s present, former, and future subsidiaries, parents, branches, divisions, related companies, affiliates, partner entities, and any successor or any permitted transferee thereof; and (B) “Company Parties” means, collectively, each and all of the Company Entities and each and all of their respective present, former, and future officers, directors, partners, principals, members, owners, shareholders, managing directors, employees, investors, fiduciaries, advisees, representatives, and agents.
1.3Notwithstanding anything herein to the contrary, in accordance with the Defend Trade Secrets Act, 18 U.S.C. § 1833(b), and other applicable law, nothing in this Agreement or any other agreement or policy shall prohibit Employee from, or expose Employee to criminal or civil liability under federal or state trade secret law for: (i) filing a charge or complaint with, communicating with, participating in any investigation or proceeding that may be conducted by, or otherwise directly or indirectly sharing any Company Entity’s trade secrets or other Confidential Information (except information protected by any Company Entity’s attorney-client or work product privilege) with an attorney or with any federal, state, or local
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government agencies, regulators, or officials, for the purpose of investigating or reporting a suspected violation of law (including but not limited to a whistleblower retaliation claim), whether in response to a subpoena or otherwise, without notice to the Company Entities; (ii) disclosing trade secrets in a complaint or other document filed in connection with a legal claim (including but not limited to a whistleblower retaliation claim), provided that the filing is made under seal, and any trade secret information is only disclosed pursuant to court order; (iii) discussing or disclosing information related to Employee’s general job duties or responsibilities and/or regarding Employee wages, as defined by applicable law; and/or (iv) in any way participating in any action seeking to rectify or address sexual harassment or other illegal conduct, or from making such good faith based allegations relating to sexual harassment, harassment, discrimination, or any other conduct prohibited by law, in accordance with the terms of this Agreement.
Section 2.Legal Process; Cooperation.
2.1Except as provided in Paragraph 1, Employee agrees that in the event he or she is served with a subpoena, document request, interrogatory, or any other legal process that will or may require Employee to disclose any Confidential Information, whether during Employee’s employment or thereafter, Employee will immediately notify the General Counsel of the Company of such fact, in writing, and provide a copy of such subpoena, document request, interrogatory, or other legal process, and shall thereafter cooperate with the Company in any lawful response to such subpoena, document request, interrogatory, or legal process as the Company may request, unless such subpoena, document request, interrogatory, or other legal process (a) is from a court or governmental agency, and (b) explicitly prohibits Employee from doing so.
2.2Employee agrees that during Employee’s employment with the Company and thereafter (regardless of whether Employee resigns or is terminated, or the reason for such resignation or termination), Employee shall provide reasonable and timely cooperation, without additional compensation, in connection with (i) any actual or threatened litigation, inquiry, review, investigation, process, or other matter, action, or proceeding (whether conducted by or before any court, regulatory, or governmental entity, or by or on behalf of any Company Party), that relates to events occurring during Employee’s employment at the Company or about which the Company otherwise believes Employee may have relevant information; (ii) the transitioning of Employee’s role and responsibilities to other personnel; and (iii) the provision of information in response to the Company’s requests and inquiries in connection with Employee’s separation. Employee’s cooperation shall include being available to (x) meet with and provide information to the Company Parties and their counsel or other agents in connection with fact-finding, investigatory, discovery, and/or pre-litigation or other proceeding issues, and (y) provide testimony in connection with any such matter, all without the requirement of being subpoenaed. The Company shall try to schedule Employee’s cooperation pursuant to this Paragraph 2.2 so as not to unduly interfere with Employee’s other personal or professional pursuits.
Section 3.Company Property. Employee agrees and acknowledges that “Company Property” shall mean all property and resources of the Company Parties or any Company Party, including without limitation, Confidential Information, each Company Party’s products, each Company Party’s computer systems and all software, e-mail and databases, telephone and facsimile services and all other administrative and/or support services provided by the Company Parties. Employee further agrees that “Company Property” shall also include any information regarding processes, data, methods, information or other inventions, developments or improvements that Employee conceives, originates develops or creates, solely or jointly with others, during or as a result of Employee’s employment with the Company, and whether or not any of the foregoing also may be included within “Confidential Information” as defined under this Agreement. Upon termination of Employee’s employment (for any reason), or at any other
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time as the Company so requests, Employee agrees to deliver to the Company (and not retain any copies of) all property, proprietary materials, Confidential Information, documents, and computer media in any form (and all copies thereof) relating or belonging to any Company Party, including but not limited to all Company Property. Employee will permanently destroy and will not reproduce or appropriate for Employee’s own use, or for the use of others, any property (including but not limited to Work Product) of the Company or any Confidential Information or documents containing information related to Work Product.
Section 4.Work Product.
1.1Employee agrees that any and all trade secrets, mask works, ideas, developments, improvements, inventions, discoveries, creations, formulae, algorithms, source and object code, data, processes, systems, interfaces, protocols, concepts, programs, products, risk management tools, methods, designs, and works of authorship, and any and all documents, information (including Confidential Information), or things relating thereto, whether patentable or not, within the scope of or pertinent to any business, research, or development in which the Company or any other Company Entity has been or is engaged or (if such is known to or ascertainable by Employee) considering engaging, which Employee has or may conceive, make, author, create, invent, develop, or reduce to practice, in whole or in part, during Employee’s employment with the Company or affiliation with any of the Company Parties, whether alone or working with others, whether during or outside of normal working hours, whether inside or outside of the Company’s offices, and whether with or without the use of the Company’s computers, systems, materials, equipment, or other property, shall be and remain the sole and exclusive property of the Company (the foregoing, individually and collectively, “Work Product”). To the maximum extent allowable by law, any Work Product subject to copyright protection shall be considered “works made for hire” for the Company under U.S. copyright law. To the extent that any Work Product that is subject to copyright protection is not considered a work made for hire, or to the extent that Employee otherwise has or retains any ownership or other rights in any Work Product (or any intellectual property rights therein) anywhere in the world, Employee hereby assigns and transfers (and agrees to assign in the future, when such inventions, Work Product, or proprietary rights are first reduced to practice or first fixed in a tangible medium, as applicable) to the Company all such rights, title, and interest in and to Work Product and other Confidential Information of the Company including the trade secret, patent, copyright mask work, and other intellectual property rights therein or “moral rights” throughout the world, together with all national, foreign and state registrations, applications for registration and all renewals and extensions thereof (including, without limitation, any provisionals, continuations, continuations-in-art, divisionals, reissues, substitutions, reexaminations), all goodwill associated therewith and all benefits, privileges, causes of action and remedies relating to any of the foregoing, whether before or hereafter accrued (including, without limitation, the exclusive rights to apply for and maintain all such registrations, renewals and extensions; to sue for all past, present and future infringements or other violations of any rights relating thereto; and to settle and retain proceeds from any such actions), effective automatically as and when such Work Product is conceived, made, authored, created, invented, developed, or reduced to practice. The Company shall have the full worldwide right to use, assign, license, and/or transfer all rights in, with, to, or relating to Work Product (and all intellectual property rights therein). To the extent any of Employee’s rights in Work Product are not assignable or waivable, Employee hereby grants the Company a perpetual, irrevocable, worldwide, fully-paid, exclusive license to use and exercise such rights in any manner whatsoever.
1.2The laws of some states prohibit the assignment of certain invention rights (e.g., California Labor Code § 2870; Delaware Code Title 19 § 805; Illinois 765 ILCS 1060/1-3; Kansas Stat. Ann. § 44-130; Minnesota Stat. 13A, § 181.78; North Carolina Gen. Stat. Art. 10A, § 66-57.1; Utah Stat. § 34-39-1 through 34-39-3; Washington RCW 49.44.140). This Agreement shall be construed so that it complies with all such applicable laws. To that end, to the extent
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applicable state law requires it, Company provides Employee with the following notice related to Work Product: NOTICE: This Agreement does not apply to an invention for which no equipment, supplies, facility, or trade secret information of the Company was used and which was developed entirely on such employee’s own time, unless (a) the invention relates at the time of conception or reduction to practice (i) to the business of the Company, or (ii) to the Company's actual or demonstrably anticipated research or development, or (b) the invention results from any work that such employee performed for the Company. If the state law that applies provides greater invention rights to Employee than as described in the above notice, those greater rights will apply to Employee inventions. Employee agrees, understands and acknowledges that nothing in this Agreement is intended to expand the scope of protection regarding invention rights that is provided to Employee by applicable law.
1.3Any inventions, if any, patented or unpatented, which Employee made prior to the commencement of employment with the Company are excluded from the scope of this Agreement and “Work Product”. To preclude any possible uncertainty, Employee has set forth on Appendix A (Prior Inventions) attached hereto a complete list of all inventions that Employee has, alone or jointly with others, conceived, developed or reduced to practice or caused to be conceived, developed or reduced to practice prior to the commencement of Employee’s employment with the Company, that Employee considers to be Employee property or the property of third parties and that Employee wishes to have excluded from the scope of this Agreement (collectively referred to as “Prior Inventions”). If disclosure of any such Prior Invention would cause Employee to violate any prior confidentiality agreement, Employee understands that Employee should not list such Prior Inventions in Appendix A but can disclose a cursory name for each such Prior Invention, a listing of the party or parties to which it belongs and the fact that full disclosure as to such Prior Inventions has not been made for that reason. A space is provided on Appendix A for such purpose. If no such disclosure is attached, Employee represents that there are no Prior Inventions. If, in the course of Employee’s employment with the Company, Employee incorporates a Prior Invention into a product, process or machine of the Company, the Company, as applicable, is hereby granted and will have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide license (with rights to sublicense through multiple tiers of sublicensees) to reproduce, distribute, display, perform (whether publicly or otherwise), prepare derivative works of and otherwise modify, make, have made, sell, offer to sell, import and otherwise use and exploit such Prior Invention. Notwithstanding the foregoing, Employee agrees that they will not incorporate, or permit to be incorporated, Prior Inventions in any Company Inventions, except as authorized in writing by an officer of the Company (other than Employee, if Employee is an officer of the Company).
1.4Employee shall, whenever requested to do so by the Company (whether during Employee’s employment or thereafter), execute any and all applications, assignments, and/or other instruments, and do all other things (including cooperating in any matter or giving testimony in any legal proceeding) which the Company may deem necessary or appropriate in order to (i) apply for, obtain, maintain, enforce, or defend patent, trademark, copyright, or similar registrations of the United States or any other country for any Work Product; (ii) assign, transfer, convey, or otherwise make available to the Company any right, title, or interest which Employee might otherwise have in any Work Product; and/or (iii) confirm the Company’s right, title, and interest in any Work Product. Employee shall promptly communicate and disclose all Work Product to the Company and, upon request, report upon and deliver all such Work Product to the Company. Employee shall not use or permit any Work Product to be used for any purpose other than on behalf of the Company Entities, whether during Employee’s employment or thereafter.
4.5In the event the Company is unable for any reason, after reasonable effort, to secure Employee’s signature on any document needed in connection with the actions specified in this Paragraph 4, Employee hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Employee’s agent and attorney in fact, which appointment
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is coupled with an interest, to act for and in Employee’s behalf to execute, verify and file any such documents and to do all other lawfully permitted acts to further the purposes of this Paragraph 4 with the same legal force and effect as if executed, verified or filed by Employee. Employee hereby waives and quitclaims to the Company all of Employee’s individual rights under patent and/or copyright legislation arising in connection with all Work Product and any and all claims, of any nature whatsoever, which Employee now or may hereafter have for infringement or misappropriation of any proprietary rights assigned under this Agreement to the Company.
Section 5.Non-Solicitation. Employee agrees that during Employee’s employment with the Company and for the twelve (12) month period following the termination of Employee’s employment (regardless of whether Employee resigns or is terminated, or the reason for any such resignation or termination) (the “Non-Solicit Restricted Period”), Employee shall not, without the express written approval of an officer of the Company (which consent may be granted or withheld in the Company’s sole and absolute discretion), whether on behalf of or for the benefit of Employee or any other person or entity, whether as a principal, partner, owner, officer, director, individual, member, consultant, contractor, volunteer, representative, agent, or in any other capacity whatsoever, and whether or not for compensation, directly or indirectly: (i) solicit, induce, or encourage the resignation or termination of, or attempt to solicit, induce, or encourage the resignation or termination of, any employee of any of the Company Parties; (ii) interfere, or attempt to interfere, in any way with the relationship between any of the Company Parties, on the one hand, and any of their respective members, partners, principals, owners, officers, directors, employees, customers, clients, distributors, vendors or suppliers, on the other hand; or (iii) solicit, hire, recruit, employ, engage, or retain or allow Employee’s name to be used in connection with the solicitation, hiring, recruiting, employing, engaging, or retention of, any person who as of such date, or at some time during the three (3) months preceding such date, is or was an employee of any of the Company Parties. Notwithstanding the foregoing, nothing contained in this Paragraph 5 or otherwise contained in this Agreement shall be deemed to prohibit Employee from (i) conducting, participating in, or otherwise being aware of any general solicitation not specifically targeted at any employee(s) of the Company Parties and hiring any such employee(s) who responds to such general solicitation, and the same shall not constitute a breach of this Paragraph 5, or (ii) soliciting for employment or hiring any employee of the Company who has been terminated by the Company.
Section 6.Non-Competition. Employee acknowledges that during the course of Employee’s employment with the Company, its subsidiaries, and affiliates, Employee will become familiar with the Company’s trade secrets and Confidential Information, that Employee will represent, embody, and benefit from the goodwill of the Company in Employee’s dealings with others, and that Employee’s services will be of special, unique, and extraordinary value to the Company, and, therefore, and as a further material inducement for the Company to continue to employ Employee, Employee agrees that during Employee’s employment with the Company and for the twelve (12) month period following the end of Employee’s employment (regardless of whether Employee resigns or is terminated, or the reason for any such resignation or termination) (the “Non-Competition Restricted Period”), Employee shall not, without the express written approval from the board of directors of the Company in the case of the CEO, or the CEO in the case of any other officer of the Company, directly or indirectly: (i) own any equity or other ownership interest in any Competing Business (as defined below), (ii) manage, operate, finance, or control a Competing Business, (iii) serve in a similar role or function as that which Employee performed for the Company for the twenty-four (24) months immediately preceding Employee’s resignation or termination from the Company (whether prior to the execution of this Agreement or after the execution of this Agreement) for a Competing Business or (iv) engage in duties for, consult with, advise, or provide services or products to a Competing Business; provided, however, that nothing in this Agreement shall preclude Employee from investing Employee’s personal assets in the securities of any Competing Business if such securities are traded on a
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national stock exchange or in the over-the-counter market and if such investment does not result in Employee beneficially owning, at any time, more than two percent (2%) of such Competing Business. As used in this Agreement, “Competing Business” means any business that is engaged in direct competition with the Company for the provision of services, technology, and solutions to the oil and gas industry that are the same or substantially similar to those then being provided by the Company; provided that Employee shall be restricted from engaging in any of the foregoing activities only to the extent reasonably necessary to protect the legitimate business interests of the Company Entities, including customer goodwill, trade secrets, other Confidential Information, and the Company Entities’ relationship with customers, clients, and investors.
Section 7.Non-Disparagement; Non-Publicity. Except as provided in Paragraph 1 above, Employee agrees that, both during and after Employees’ employment, (a) Employee will not directly or indirectly, make, publish, encourage, ratify, or authorize, or aid, assist, or direct any other person or entity in making or publishing, any statements that in any way defame, criticize, malign, impugn, reflect negatively on, or disparage any Company Party, or place any Company Party in a negative light, in any manner whatsoever; and (b) absent the explicit written approval of an officer of the Company, Employee will not (i) comment upon or discuss any of the Company Parties (whether disparagingly or otherwise) on any Media (as defined below); (ii) make any statement, posting, or other communication in, on, to or through any media (whether print, television, radio, the internet, social media, or with or through any reporter, blogger, “app” (such as Instagram, Snapchat, or the like), or otherwise, collectively “Media”) that purports to be on behalf of any Company Party, or which a third party may perceive (A) has been authorized, approved, or endorsed by a Company Party or (B) reflects the views of any Company Party; (iii) share, post, transmit, or upload any material related to any of the Company Parties (regardless of whether such comments, statements, or material are disparaging) with, to, through, or on any Media; (iv) utilize Employee’s Company email account on any Media or for any other non-work purpose, (v) utilize any Company Party’s logo, graphics, trade names, or trademarks on any Media or for any other purpose; (vi) provide any Company Party’s promotional material to any Media outlet; or (vii) aid, assist, or direct any other person or entity to do any of the foregoing. Nothing contained in this Paragraph 7 shall (i) preclude Employee from enforcing his/her rights under this Agreement, (ii) restrict or impede Employee from exercising protected rights to the extent that such rights cannot be waived by agreement, (iii) restrict or impede Employee from complying with any applicable law or regulation or a valid order of a court of competent jurisdiction or an authorized government agency, provided that such compliance does not exceed that required by the law, regulation, or order, or (iv) restrict or impede Employee from truthfully testifying in response to a legal process or governmental inquiry.
Section 8.Reasonableness/Tolling. Employee acknowledges that the restrictions set forth in Paragraphs 1 through 7 of this Agreement are fair and reasonable, and will not prevent Employee from earning a livelihood after leaving the Company’s employ. Employee recognizes that these restrictions are appropriate based on the nature of the services Employee will render, the access to the Company’s Confidential Information that Employee will enjoy, the access to the Company’s investors that Employee will have as a result of Employee’s employment and position with the Company, and the risk of unfair competition that the Company will face absent such restrictions. Employee agrees that should Employee breach any of the provisions of Paragraphs 5 and/or 6, above, the running of the Non-Solicit Restricted Period and/or the Non-Competition Restricted Period shall be tolled during the period of such breach; provided that the tolling of the Non-Competition Restricted Period shall not exceed twelve (12) months.
Section 9.Remedy for Breach. Employee agrees that Employee’s breach or threatened breach of any of the restrictions set forth in Paragraphs 1 through 7 of this Agreement will result in irreparable and continuing damage to the Company for which there is no adequate
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remedy at law. Thus, in addition to the Company’s right to arbitrate disputes hereunder (as set forth in Paragraph 10, below), the Company and the Company Parties shall be entitled to obtain emergency equitable relief, including a temporary restraining order and/or preliminary injunction from any state or federal court of competent jurisdiction, without first posting a bond, to restrain any such breach or threatened breach. Employee agrees such suit for equitable relief may be brought in U.S. state and federal courts located in Harris County, Texas for any and all such claims. Employee agrees that venue and personal jurisdiction in such location is proper. Employee specifically consents to the jurisdiction and venue of such courts for the purpose of any proceeding brought to enforce this Agreement. Employee expressly waives any claim that such jurisdiction is an inconvenient or inappropriate forum. Upon the issuance (or denial) of an injunction, the underlying merits of any dispute will be resolved in accordance with the arbitration provisions of Paragraph 10 of this Agreement. The relief described in this Paragraph 9 shall be in addition to any and all other remedies, including damages, available to the Company and the Company Parties against Employee for such breaches or threatened breaches.
Section 10.Arbitration.
10.1Except as provided in Paragraph 9 of this Agreement, the Parties irrevocably and unconditionally agree that any past, present, or future dispute, controversy, or claim arising under or relating to (i) Employees’ employment or the termination thereof, (ii) this Agreement, (iii) any employment or other agreement between Employee and any Company Party, (iv) any federal, state, local, or foreign statute, regulation, law, ordinance, or the common law (including but not limited to any law prohibiting discrimination); involving Employee, on the one hand, and any of the Company Parties, on the other hand, including both claims brought by Employee and claims brought against Employee, shall be governed by the Federal Arbitration Act (“FAA”) and submitted to binding arbitration before the American Arbitration Association (“AAA”) for resolution. The Parties further agree that any claims will be adjudicated on an individual basis, and each waives the right to participate in a class, collective, representative, Private Attorney General Act, or other joint action with respect to the claims. The Parties further agree that the arbitrator may not consolidate more than one person’s claims and may not otherwise preside over any form of a representative or class proceeding, and that claims pertaining to different employees shall be heard in separate proceedings. Such arbitration shall be conducted in accordance with AAA’s Employment Arbitration Rules and Procedures. Within 10 business days of the initiation of an arbitration hereunder, the Parties shall each separately designate an arbitrator, who shall be a former partner at an “AmLaw 200” law firm based in Houston, Texas and within 20 business days of selection, the appointed arbitrators shall appoint a neutral arbitrator from the AAA Panel of Employment Arbitrators. Such arbitration shall be conducted in Houston, Texas, and the arbitrators shall apply Texas law, including federal statutory law as applied in Texas courts. Except as set forth in Paragraph 9 above, the arbitrators, and not any federal, state, or local court or adjudicatory authority, shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability, and/or formation of this Agreement, including but not limited to any dispute as to whether (i) a particular claim is subject to arbitration hereunder, and/or (ii) any part of this Paragraph 10.1 is void or voidable. The arbitrators shall issue their written decision (including a statement of finding of facts and the reasons for the award) within 30 days from the date of the close of the arbitration hearing, or as soon as reasonably practicable. Except as otherwise provided herein, the Parties shall treat any arbitration as strictly confidential, and shall not disclose the existence or nature of any claim or defense, unless required by applicable law (including public disclosures under applicable securities laws); any documents, correspondence, pleadings, briefing, exhibits, or information exchanged or presented in connection with any claim or defense; or any rulings, decisions, or results of any claim, defense, or argument (collectively, “Arbitration Materials”) to any third party, with the exception of the Parties’ legal counsel, spouses and/or tax advisors or such other similar consultants (who the applicable Party shall ensure complies with these confidentiality terms). Except as provided in Paragraph 10.3 below, the arbitrators shall not have authority to
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award attorneys’ fees or costs, punitive damages, compensatory damages, damages for emotional distress, penalties, or any other damages not measured by the prevailing party’s actual losses, except to the extent such relief is explicitly available under a statute, ordinance, or regulation pursuant to which a claim is brought. IN AGREEING TO ARBITRATE THEIR CLAIMS HEREUNDER, THE PARTIES HEREBY RECOGNIZE AND AGREE THAT THEY ARE WAIVING THEIR RIGHT TO A TRIAL IN COURT AND/OR BY A JURY.
10.2In the event of any court proceeding to challenge or enforce an arbitrators’ award, the Parties hereby consent to the exclusive jurisdiction of the state and federal courts sitting in Harris County, Texas; agree to exclusive venue in that jurisdiction; and waive any claim that such jurisdiction is an inconvenient or inappropriate forum. There shall be no interlocutory appeals to any court, or any motions to vacate any order of the arbitrators that is not a final award dispositive of the arbitration in its entirety, except as required by law. The Parties agree to take all steps necessary to protect the confidentiality of the Arbitration Materials in connection with any court proceeding (and/or any proceeding under Paragraph 9, above), agree to use their best efforts to file all Confidential Information (and documents containing Confidential Information) under seal, and agree to the entry of an appropriate protective order encompassing the confidentiality terms of this Agreement.
10.3Employee and the Company Parties shall each bear their own expenses, legal fees and other fees incurred in connection with this Agreement; provided, that the prevailing party in any such action shall be fully reimbursed by the other party for all costs, including reasonable attorneys’ fees, court costs, expert or consultants’ fees and reasonable travel and lodging expenses, incurred by the prevailing party in its successful prosecution or defense thereof, including any appellate proceedings.
Section 11.Entire Agreement; No Waiver. This Agreement replaces and supersedes any and all previous or existing agreements, arrangements, or understandings, whether oral or written, between Employee and any Company Entity with respect to the subject matters set forth herein. Employee specifically acknowledges and agrees that notwithstanding any discussions or negotiations Employee may have had with any of the Company Parties prior to the execution of this Agreement, Employee is not relying on any promises or assurances other than those explicitly contained in this Agreement with respect to the matters set forth herein. This Agreement contains the entire agreement and understanding of the Parties with respect to the matters set forth herein, and the terms and conditions of Employee’s employment can be modified only in an agreement signed by Employee and a duly authorized officer of the Company. No provision of this Agreement may be amended modified, waived, or discharged except as agreed to in a writing signed by both Employee and a duly authorized officer of the Company. The failure of a Party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver thereof or deprive that Party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.
Section 12.Construction/Severability. The headings in this Agreement are included for convenience of reference only and shall not affect the interpretation of this Agreement. This Agreement shall be interpreted strictly in accordance with its terms, to the maximum extent permissible under governing law, and shall not be construed against or in favor of any Party, regardless of which Party drafted this Agreement or any provision hereof. If any provision of this Agreement is determined to be unenforceable as a matter of governing law, an arbitrator or reviewing court shall have the authority to “blue pencil” or otherwise modify such provision so as to render it enforceable while maintaining the parties’ original intent to the maximum extent possible. In the event that the applicable court or arbitrator does not exercise the power granted to it in the prior sentence, Employee and the Company Entities agree to replace such invalid or unenforceable term or provision with a valid and enforceable term or provision that will achieve, to the extent possible, the economic, business and other purposes of
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such invalid or unenforceable term. Each provision of this Agreement is severable from the other provisions hereof, and if one or more provisions hereof are declared invalid, the remaining provisions shall nevertheless remain in full force and effect. The terms of this Agreement shall survive the termination of Employee’s employment with the Company, regardless of whether Employee resigns or is terminated or the reason for any such resignation or termination.
Section 13.Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas applicable to agreements made and/or to be performed in that State, without regard to any principles of conflicts of law.
Section 14.Third Party Beneficiaries. Each of the Company Parties are intended to be, and are, third party beneficiaries of this Agreement and shall be entitled to enforce this Agreement in accordance with its terms.
Section 15.Successors and Assigns. This Agreement may be assigned by the Company. Upon such assignment, the rights and obligations of the Company hereunder shall become the rights and obligations of such assigned party. Employee may not assign or delegate Employee’s rights and/or obligations under this Agreement. Any purported assignment or delegation by Employee in violation of the foregoing shall be null and void ab initio and of no force or effect.
Section 16.Counterparts. This Agreement may be executed in multiple counterparts, which together shall constitute one and the same agreement. Facsimile, pdf, and other true and accurate copies of this Agreement shall have the same force and effect as originals hereof.
Section 17.Continuation of At-Will Relationship. Employee acknowledges and agrees that Employee’s employment is at-will and nothing in this Agreement alters the at-will status of the Employee’s employment with the Company. The Company also reserves the right to modify the terms, benefits, and conditions of Employee’s employment at any time.
[signature page follows]
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ACCEPTED AND AGREED:
[Employee Name]
Date:
Weatherford International plc
By:
Name:
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INSIDER TRADING POLICY | ||
INSIDER TRADING POLICY
PURPOSE
WHY do we have this Policy?
This Policy establishes the enterprise rules and governing principles regarding the prohibition on Insider Trading for worldwide operations of Weatherford International plc, and its subsidiaries (hereinafter “Weatherford”). Weatherford shares are publicly traded and Weatherford publicly discloses information about its operations and business from time to time. Persons inside Weatherford will at times have information regarding Weatherford that has not yet been publicly disclosed and that could materially affect the value of Weatherford’s securities. U.S. and other securities laws are designed to protect the integrity of the trading markets by preventing insiders who have material, non-public information about a company from trading in the company’s securities on the basis of that information. To promote compliance with securities laws, Weatherford has adopted this Policy.
SCOPE
WHO must follow this Policy?
This Policy applies to all of Weatherford’s employees, directors, officers, consultants, contractors, interns and third parties (and members of their households or entities they control such as companies or trusts) working for or on behalf of Weatherford.
DEFINITIONS
WHAT TERMS must I be familiar with?
INSIDE INFORMATION: Inside Information includes any material, non-public information, whether “good news” or “bad news,” where:
•There is a substantial likelihood that a reasonable investor could consider the information important in deciding whether to buy or sell Weatherford securities;
•The information, if disclosed, could be viewed by a reasonable investor as having significantly altered the “total mix” of publicly available information about Weatherford; or
•The information, when disclosed, is reasonably likely to affect the trading price of Weatherford securities.
Information may be material for this purpose even if it would not alone affect an investor’s decision and regardless of whether the effect on the market price of the securities would arise in the short term or long term. The materiality of information is assessed at a given time and is not limited to information of a financial nature; rather it can relate to virtually any aspect of Weatherford’s business.
If securities transactions ever become the subject of scrutiny, they are likely to be viewed after-the-fact with the benefit of hindsight. Before engaging in any transaction, an insider should carefully consider how a transaction may be construed in the bright light of hindsight.
Inside information is not limited to historical facts, but also may include projections and forecasts. Some (but not all) of the matters that would be considered inside information include:
•Earnings, or earnings forecasts including expectations for future periods,
•undisclosed past financial results,
•changes in accounting and tax matters,
•possible business acquisitions, mergers, dispositions or other transactions,
•formation of a joint venture or other strategic relationship,
•acquisition or loss of a significant supplier or customer or contract,
•important product or technology developments,
•a cybersecurity incident,
•significant financing developments,
•key personnel or management changes,
•significant labor negotiations or disputes,
•capital market transactions, including share repurchases,
•changes in debt ratings,
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INSIDER TRADING POLICY | ||
•impending bankruptcy or liquidity problems,
•major litigation or regulatory developments,
•any other event or development that Weatherford would likely disclose on a current or periodic report to be filed with the U.S. Securities and Exchange Commission (the “SEC”), or
•the content of any forthcoming report or news article that could affect Weatherford’s share price.
Inside information does not exclusively mean information relating to Weatherford, but also information relating to other companies, public or private, that Weatherford does business with (including negotiations). If you have any doubt about whether certain information is inside information, please consult with the Legal Department.
INSIDER: “Insider(s)” are all Weatherford employees, directors, officers, consultants, contractors, interns and third parties who have access to inside information (including employees with knowledge of financial, accounting, legal and transactional information of Weatherford) and who are notified that they have been designated as “Insiders,” and members of their immediate families, members of their households and entities they control such as companies or trusts.
NON-PUBLIC INFORMATION: Non-public information is information that has not been widely disseminated in a manner making it generally available to investors through major media, website and social media, and/or through a filing with the SEC. The circulation of rumors, even if accurate and reported in the media, does not constitute effective public dissemination. Non-public information may also include information available to Weatherford on a confidential basis. If you have any doubt about whether certain information is non-public, please consult with the Legal Department.
BLACKOUT PERIODS: A Blackout Period is a scheduled or special period of time when Insiders may not trade Weatherford securities. Blackout Periods include Quarterly Blackout Periods and Special Blackout Periods as described below.
Quarterly Blackout Periods cover the period when financial information has been compiled but not yet publicly released. The Quarterly Blackout Periods begin around the time that appropriate personnel begin work on Weatherford’s financials and end after the market has had sufficient time to absorb the published results (subject to change by the Legal Department).
The Quarterly Blackout Periods are:
Q1 March 16 through one full trading day after earnings release. Q2 June 15 through one full trading day after earnings release.
Q3 September 15 through one full trading day after earnings release. Q4 December 16 through one full trading day after earnings release.
By way of example as to what is meant by “full trading day,” if Weatherford’s earnings release is before the opening of the market on Monday, assuming the Insider does not otherwise possess material, non-public information at such time, a trade could be made on Tuesday. Alternatively, if Weatherford’s earnings release is after the closing of the market on Monday, assuming the Insider does not otherwise possess material, non-public information at such time, a trade could be made on Wednesday.
Special Blackout Periods are imposed by the Legal Department from time to time because of developments known to Weatherford and not yet disclosed to the public. If this happens, the Legal Department will notify persons subject to the Special Blackout Period of when the period begins and ends.
A notification you receive as to a Special Blackout Period may in and of itself be considered material, non-public information and should not be disclosed to others, except as permitted under this Policy.
SECURITIES: Securities include, without limitation, common stock and any other securities that Weatherford issues such as debt securities and grants or awards under equity incentive plans.
SECURITIES TRANSACTIONS: Securities transactions include, without limitation, purchases or sales of securities executed in public or private transactions, and whether you execute the transaction individually, directly or indirectly, or through a broker or another person or entity.
RESPONSIBILITIES
It is the responsibility of HUMAN RESOURCES AND LEGAL, under the direction of the GENERAL COUNSEL, to implement, monitor and enforce this Policy within their respective areas.
It is the responsibility of the LEGAL DEPARTMENT to maintain this Policy.
REQUIREMENTS
FOLLOW the rules.
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INSIDER TRADING POLICY | ||
1.No trading on inside information.
You may not buy or sell Weatherford securities, or direct someone else to buy or sell them for you, when you are aware of inside information. You also may not trade in another company’s securities if you are in possession of any material, non-public information regarding that company.
2.No disclosure of inside information.
Inside information shall not be disclosed, for any reason, to any person other than Weatherford directors, executive officers and employees who need to know the information in order to fulfill their duties or outside third parties under contract with Weatherford with whom you interact in the course of your employment or provision of services and who need to know the information in order to fulfill their contractual duties and/or are otherwise subject to confidentiality obligations. Among other purposes, this is to ensure compliance with Regulation FD under the Securities Exchange Act of 1934 (the “Exchange Act”) regarding the use of confidential information and selective disclosure to third parties. The Legal Department will also assess the necessity of the execution of a confidentiality agreement with persons inside or outside Weatherford.
Confidential, sensitive, proprietary or non-public information shall not be disclosed to anyone outside of Weatherford regardless of your view as to its materiality. No disclosure may be made without following standard procedures. Communications on behalf of Weatherford with the media, securities analysts, investors and prospective investors must be made only by specifically designated Weatherford representatives. Unless you have been expressly authorized to make such communications, if you receive any inquiry relating to Weatherford from the media, a securities analyst or an investor or prospective investor, you should decline to comment and refer the inquiry to Investor Relations.
You may not pass on inside information to any person who does not need to know it. If you do, regardless of the reason and regardless of the medium through which you release the information, you have impermissibly disclosed inside information in violation of this Policy, and perhaps in violation of U.S. federal securities laws. “Tips” and recommendations to third parties based on inside information are clearly in violation of this Policy and U.S. federal securities laws. The motive or purpose for your release of the inside information is irrelevant; even if you don’t receive any financial or other benefits in exchange for the information, your disclosure is impermissible. Also, any manner of passing on information constitutes a “disclosure,” including (but not limited to) discussions, e-mails, text messages, and other forms of electronic communication like posts or comments to social networking sites or blogs or via social media.
Disclosures made to any person (other than persons who need to know the information in order to fulfill their legal or contractual duties) are impermissible. You may not, therefore, disclose inside information to friends, family, co-workers, stockbrokers, or anyone else (verbally, in writing, online or otherwise), until the information has been disclosed publicly and the public has had at least one full trading day to react to it. Even what you consider to be a brief or inconsequential mention of the inside information to a close friend or family member may result in significant consequences to you and to Weatherford.
Inadvertent disclosure of inside information may violate this Policy. You should not discuss or have available to view inside information even with those to whom you are entitled to disclose, in any public area or forum, due to the risk that you will be overheard (such as in an airport or on an airplane, in a restaurant, including a dining facility on Weatherford property, or elevators, including in Weatherford offices) or that written or electronic materials including inside information may be seen by others.
3.No use of inside information for personal gain.
Non-public information gained in the course of your employment or provision of services to Weatherford may not be used for personal gain, including providing inside information to third parties in exchange for a consulting fee or other benefit.
4.No trading during Blackout Periods by Insiders.
Directors, officers and certain employees who have access to inside information and who are notified that they have been designated as “Insiders” shall not buy or sell Weatherford securities (which includes the exercise of options and shares held under a 401(k) Plan and changes to any ESPP Plan elections) during the Blackout Periods, regardless of whether or not the Insider actually has inside information at the time. Additionally, except in exceptional circumstances approved by the Legal Department, gifts of Weatherford securities by Insiders are also subject to this Blackout Period restriction. Transactions under Weatherford’s equity compensation plans with respect to “net” share withholding to satisfy tax liabilities (other than with respect to broker-assisted sales) or the delivery or distribution of shares, in either event, that are not considered “purchases” or “sales” under applicable securities laws, are not prohibited during a Blackout Period. For the avoidance of doubt, options may not be exercised during any Blackout Period unless the exercise was outside of the Blackout Period Transactions made pursuant to Rule 10b5-1 trading plans entered into in compliance with this Policy are exempt from the Blackout Period restrictions.
5.Insiders must pre-clear trades of Weatherford shares.
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Insiders must pre-clear all trading orders, as well as Rule 10b5-1 compliant plans in accordance with Section 6 below, with the Legal Department even outside a Blackout Period. If you are an Insider (and you will be told if you are), even outside of a Blackout Period you must pre-clear any trade order before you submit the order to a broker. To do so, submit a Stock Preclearance request in the Legal & Compliance Service Portal not more than five trading days before the anticipated order to request clearance from the Legal Department to buy, sell, or otherwise transfer or dispose of (including gifts) Weatherford securities and confirming that you do not have inside information. If you receive a response of “no objection” the request is approved, you may place the order within the next five trading days. Weatherford’s failure to object to a trade is never authorization to trade if you have inside information and will not relieve you of your obligations under this Policy or law for trading on the basis of inside information. Weatherford’s failure to object is also never an endorsement or recommendation of any trade. Any response to a request to trade does not constitute legal advice, nor is it a confirmation from Weatherford that you do not possess material, non-public information.
6.Pre-Clear any Rule 10b5-1 Trading Plans.
SEC Rule 10b5-1 defines when a purchase or sale constitutes trading “on the basis of” material, non-public information and provides certain affirmative defenses to a claim of insider trading if a person demonstrates an adopted written plan for trading securities, while not in possession of and before becoming aware of the inside information, specifying amounts, prices and dates for the “trading” plan actions or a formula for setting such amounts, prices and dates, and the purchase or sale was pursuant to the plan (a purchase or sale is not pursuant to a plan if the person who made the plan altered or deviated from it).
Weatherford permits you to adopt Rule 10b5-1 compliant plans. However, such plans must be pre-cleared with the Legal Department before adoption and must comply with the Rule 10b5-1 and this Policy. A plan may not be entered into, amended or terminated during a Blackout Period or when the person is aware of material, non-public information.
Adopted and executed Rule 10b5-1 plans must be provided to the Legal Department within one trading day after the execution of the plan. In addition, if you are a director or Section 16 officer, you must also notify the Legal Department within one trading day after the completion of any transactions under the plan. Sales pursuant to Rule 10b5-1 trading plans must be reported on Form 4, and the specific checkbox on the form must be selected to indicate that the transaction was pursuant to a plan.
7.Directors and Section 16 officers must notify the Legal Department following any ownership changes.
Section 16(a) of the Exchange Act generally requires all executive officers (Section 16 officers), directors and 10% stockholders to file Section 16 reports with the SEC when they engage in transactions in the Company’s securities. Directors and Section 16 officers must comply with Section 16 reporting obligations under the Exchange Act. To ensure the timely preparation and filing of all required reports regarding any transaction in Weatherford securities under Section 16, if you are a director or Section 16 officer of Weatherford, you must report any transaction in Weatherford securities immediately, but within one trading day after the conclusion of any trades at the latest. This requirement is in addition to the requirement to obtain pre-clearance of any proposed trades pursuant to this Policy. Persons subject to Section 16 should also be aware of “short swing” trading liability for matching purchases and/or sales within six months.
8.Do Not Hedge or Engage in “Short” Sales.
Insiders and members of their immediate families and members of their households may not engage in hedging or other monetizing transactions, such as prepaid variable forwards, equity swaps, collars and exchange funds, or trade in options, warrants, puts and calls or similar instruments on Weatherford securities or sell Weatherford securities “short.” Short sales are defined as sales of securities that are not then owned, including a “sale against the box,” defined as a sale with a delayed delivery.
9.Do Not Pledge your Weatherford Securities as Margin.
Insiders (or their immediate family members, members of their households or entities they control such as companies or trusts) may not hold Weatherford securities in an account subject to a margin call or pledge Weatherford securities as collateral for a loan. Securities held in a margin account may be sold by the broker without the customer’s consent if the customer fails to meet a margin call. Securities pledged as collateral for a loan may be sold in foreclosure if the borrower defaults on the loan. An exception may be granted when a person wishes to pledge Weatherford securities for a loan (not including margin debt) and clearly demonstrates the financial capacity to repay the loan without resort to the pledged securities. If you wish to pledge Weatherford securities as collateral for a loan, you must submit a request for approval using a General Legal Request (Ask Legal) in the Legal & Compliance Service Portal at least two weeks prior to the proposed execution of documents evidencing the proposed pledge.
10.Reporting Obligation.
If you become aware of a violation of this Policy, you should report it immediately by submitting a General Legal Request (Ask Legal) in the Legal & Compliance Service Portal (subject only to any exceptions or prohibitions on reporting under applicable law).
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INSIDER TRADING POLICY | ||
11.Stock Buyback Programs
During such time as Weatherford is trading under a stock buy-back program, if any, the officers and any directors, in each case, that have material, non-public information regarding the program, are prohibited from selling Weatherford securities (other than pursuant to a Rule 10b5-1 trading plan). Additionally, during such time as Weatherford is trading under a stock buy-back program these officers and directors should coordinate any share purchases through the Legal Department to facilitate Weatherford’s compliance with Rule 10b-18.
ADHERENCE
Adherence to this Policy is mandatory. Unauthorized deviations to this Policy may lead to:
•Criminal fines and imprisonment;
•Judgment in favor of a damaged investor for any profits made from trading on the information and possible payment of damages;
•Court injunctions;
•Administrative sanction;
•Civil monetary penalties of up to three times the amount of profit gained, or loss avoided; and
•Disciplinary action, which may include termination of employment and/or cancellation or forfeiture of unvested equity awards or recoupment of amounts paid in conjunction with incentive compensation (whether in cash or equity) and other actions.
Weatherford may also be subject to penalties because of insider trading violations by its Insiders.
REFERENCES
ASK for help.
If you have any questions regarding the Policy, please submit a General Legal Request (Ask Legal) in the Legal & Compliance Service Portal.
CHANGE RECORD
| Revision | Date | Summary of Changes | ||||||
| A | 7/6/18 | This document replaces Policy Regarding Use of Insider Information and Insider Trading dated 3/13/18 | ||||||
| B | 1/27/20 | New template and posted in OEPS. | ||||||
| C | 2/26/21 | Updates made to content. | ||||||
| D | 3/8/22 | Updates | ||||||
| E | 7/17/23 | Replaced directives to email Legal inbox with links to submitting requests in Legal & Compliance Service Portal and minor updates to match latest policy document format. | ||||||
| F | 12/6/23 | Updates in advance of effectiveness of Nasdaq listing rules, with a focus on Rule 10b5-1 | ||||||
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Exhibit 21.1
Significant Subsidiaries
Listed below are the significant subsidiaries of the Registrant as of December 31, 2023, and the states or jurisdictions in which they are incorporated or organized. The names of other subsidiaries have been omitted from the list below, since they would not constitute, in the aggregate, a significant subsidiary as of December 31, 2023.
| Name of Company | Jurisdiction | ||||
| Weatherford International Ltd. | Bermuda | ||||
| Weatherford Oil Tool Middle East Limited | British Virgin Islands | ||||
| Weatherford U.S., L.P. | Louisiana | ||||
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the registration statements (No. 333-256809) on Form S-8 and (No. 333-265636) on Form S-3 of our reports dated February 7, 2024, with respect to the consolidated financial statements of Weatherford International plc and subsidiaries and the effectiveness of internal control over financial reporting.
/s/ KPMG LLP
Houston, Texas
February 7, 2024
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Girishchandra K. Saligram, certify that:
1.I have reviewed this annual report on Form 10-K of Weatherford International plc;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a - 15(f) and 15d - 15(f)) for the registrant and have:
a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
| Date: | February 7, 2024 | |||||||
/s/ Girishchandra K. Saligram | ||||||||
Girishchandra K. Saligram | ||||||||
President and Chief Executive Officer | ||||||||
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Arunava Mitra, certify that:
1.I have reviewed this annual report on Form 10-K of Weatherford International plc;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a - 15(f) and 15d - 15(f)) for the registrant and have:
a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
| Date: | February 7, 2024 | |||||||
/s/ Arunava Mitra | ||||||||
Arunava Mitra | ||||||||
Executive Vice President and Chief Financial Officer | ||||||||
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the annual report on Form 10-K of Weatherford International plc (the "Company") for the period ended December 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Girishchandra K. Saligram, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| /s/ Girishchandra K. Saligram | |||||||||||
| Name: | Girishchandra K. Saligram | ||||||||||
| Title: | President and Chief Executive Officer | ||||||||||
| Date: | February 7, 2024 | ||||||||||
A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
The certification the registrant furnishes in this exhibit is not deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. Registration Statements or other documents filed with the Securities and Exchange Commission shall not incorporate this exhibit by reference, except as otherwise expressly stated in such filing.
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the annual report on Form 10-K of Weatherford International plc (the "Company") for the period ended December 31, 2023 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Arunava Mitra, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Arunava Mitra | |||||||||||
| Name: | Arunava Mitra | ||||||||||
| Title: | Executive Vice President and Chief Financial Officer | ||||||||||
| Date: | February 7, 2024 | ||||||||||
A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
The certification the registrant furnishes in this exhibit is not deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. Registration Statements or other documents filed with the Securities and Exchange Commission shall not incorporate this exhibit by reference, except as otherwise expressly stated in such filing.
WEATHERFORD INTERNATIONAL PLC
EXECUTIVE OFFICER CLAWBACK POLICY
Approved by the Board of Directors on September 14, 2023
Effective as of October 2, 2023
The Board has determined that it is in the best interests of the Company and its shareholders to adopt this Policy.
1.Purpose. The purpose of this Policy is to describe the circumstances under which Executive Officers will be required to repay or return Erroneously Awarded Compensation to members of the Company Group. This Policy is designed to comply with, and will be interpreted in a manner that is consistent with, Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Section 10D of the Securities Exchange Act of 1934 and the Listing Standards. Each Executive Officer shall be required to sign and return to the Company the Acknowledgement Form attached hereto as Exhibit A pursuant to which such Executive Officer will agree to be bound by the terms and comply with this Policy. Capitalized terms used herein shall have the meaning for them set forth below.
2.Administration. This Policy shall be administered by the Committee. Any determinations made by the Committee shall be final and binding on all affected individuals. The Committee is authorized to interpret and construe this Policy and to make all determinations necessary, appropriate, or advisable for the administration of this Policy. This Policy shall be binding and enforceable against all Executive Officers and their beneficiaries, heirs, executors or other legal representatives.
3.Definitions. For purposes of this Policy, the following capitalized terms shall have the meanings:
(a)“Accounting Restatement” shall mean an accounting restatement (i) due to the material noncompliance of the Company with any financial reporting requirement under Federal securities laws, including any required accounting restatement to correct an error in previously issued financial restatements that is material to the previously issued financial statements, or (ii) that corrects an error that is not material to previously issued financial statements, but would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.
(b)“Board” shall mean the Board of Directors of the Company.
(c)“Clawback Eligible Incentive Compensation” shall mean, in connection with an Accounting Restatement and with respect to each individual who served as an Executive Officer at any time during the applicable performance period for any Incentive-based Compensation (whether or not such Executive Officer is serving at the time the Erroneously Awarded Compensation is required to be repaid to the Company Group), all Incentive-based Compensation Received by such Executive Officer (i) on or after the Effective Date, (ii) after beginning service as an Executive Officer, (iii) while the Company has a class of securities listed on a national securities exchange or a national securities association and (iv) during the applicable Clawback Period.
(d)“Clawback Period” shall mean, with respect to any Accounting Restatement, the three completed fiscal years of the Company immediately preceding the Restatement Date and any transition period (that results from a change in the Company’s fiscal year) of less than nine months within or immediately following those three completed fiscal years.
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(e)“Committee” shall mean the Compensation and Human Resources Committee of the Board.
(f)“Company” shall mean Weatherford International, plc, an Irish public limited company.
(g)“Company Group” shall mean the Company, together with each of its direct and indirect subsidiaries.
(h)“Effective Date” shall mean October 2, 2023.
(i)“Erroneously Awarded Compensation” shall mean, with respect to each Executive Officer in connection with an Accounting Restatement, the amount of Clawback Eligible Incentive Compensation that exceeds the amount of Incentive-based Compensation that otherwise would have been Received had it been determined based on the restated amounts, computed without regard to any taxes paid.
(j)“Executive Officer” shall mean (i) the Company’s current and former chief executive office, president, principal financial officer, principal accounting officer (or if there is no principal accounting officer, the controller), any vice-president in charge of a principal business unit, division or function (such as sales, administration, or finance), any other officer who performs a policy-making function for the Company, or any other person who performs similar policy-making functions for the Company, as determined by the Committee in accordance with Federal securities laws or the Listing Standards. Identification of an executive officer for purposes of this Policy includes at a minimum executive officers identified pursuant to 17 C.F.R. 229.401(b).
(k)“Financial Reporting Measures” shall mean measures that are determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, and all other measures that are derived wholly or in part from such measures. Stock price and total shareholder return (and any measures that are derived wholly or in part from stock price or total shareholder return) shall for purposes of this Policy be considered Financial Reporting Measures. For the avoidance of doubt, a Financial Reporting Measure need not be presented in the Company’s financial statements or included in a filing with the SEC in order to be considered a Financial Reporting Measure.
(l)“Incentive-based Compensation” shall mean any compensation that is granted, earned or vested based wholly or in part upon the attainment of a Financial Reporting Measure. Incentive-based Compensation does not include: (i) bonuses paid solely at the discretion of the Board or the Committee that are not paid from a bonus pool that is determined by satisfying a Financial Reporting Measure or solely upon satisfying one or more subjective standards and/or completion of a specified employment period, (ii) non-equity incentive plan awards earned solely upon satisfying one or more strategic or operational measures, (iii) equity awards not contingent upon achieving any Financial Reporting Measure and where vesting is contingent solely upon the completion of a specified employment period and/or attaining one or more non-Financial Reporting Measures or (iv) any Incentive-based Compensation received before the Company had a class of securities listed on a national securities exchange.
(m)“Listing Standards” shall mean the listing standards of Nasdaq or any other national securities exchange or national securities association on which the Company’s securities are listed.
(n)“Policy” shall mean this Executive Officer Clawback Policy, as may be amended and/or restated from time to time.
(o)“Received” shall, with respect to any Incentive-based Compensation, mean actual or deemed receipt. Incentive-based Compensation shall be deemed received in the Company’s fiscal period during which the Financial Reporting Measure specified in the Incentive-
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based Compensation award is attained, even if payment or grant of the Incentive-based Compensation occurs after the end of that period.
(p)“Restatement Date” shall mean the earlier to occur of (i) the date the Board, a committee of the Board or the officers of the Company authorized to take such action if Board action is not required, concludes, or reasonably should have concluded, that the issuer is required to prepare an Accounting Restatement, or (ii) the date of court, regulator or other legally authorized body directs the issuer to prepare an Accounting Restatement.
(q)“SEC” shall mean the U.S. Securities and Exchange Commission.
4.Repayment of Erroneously Awarded Compensation.
(a)In the event of an Accounting Restatement, the Committee shall determine whether there is and if so, the amount of any Erroneously Awarded Compensation for each Executive Officer in connection with such Accounting Restatement and thereafter, promptly provide each Executive Officer with a written notice containing the amount of Erroneously Awarded Compensation (including the calculation thereof) and a demand for repayment or return, as applicable. For Incentive-based Compensation based on (or derived from) stock price or total shareholder return where the amount of Erroneously Awarded Compensation is not subject to mathematical recalculation directly from the information in the applicable Accounting Restatement, the amount shall be determined by the Committee in good faith based on a reasonable estimate of the effect of the Accounting Restatement on the stock price or total shareholder return upon which the Incentive-based Compensation was Received (in which case, the Company shall maintain documentation of such determination of that reasonable estimate and provide such documentation to Nasdaq). Notwithstanding the foregoing, in the event the Accounting Restatement is as a result of misconduct, then, in addition to any other recoupment obligations set forth in this Policy, the Company’s chief executive officer and chief financial officer shall reimburse the Company for (i) any bonus or other incentive-based or equity-based compensation received by such person from the Company during the 12-month period following the public issuance or filing of the Accounting Restatement and (ii) any profits realized from the sale of securities of the Company during such 12-month period, in accordance with the requirements of the Sarbanes-Oxley Act of 2002.
(b)The Committee shall take such action as it deems appropriate to recover Erroneously Awarded Compensation reasonably promptly after such obligation is incurred and shall have broad discretion to determine the appropriate means of recovery of such Erroneously Awarded Compensation based on all applicable facts and circumstances. The Committee may seek recoupment in the manner it chooses, in its sole discretion, which may include, without limitation, one or a combination of the following: (i) direct reimbursement from the Executive Officer of Incentive-based Compensation previously paid, (ii) deduction of the recouped amount from unpaid compensation otherwise owed by the Company to the Executive Officer, (iii) set-off, (iv) rescinding or cancelling vested or unvested equity or cash based awards, and (v) any other remedial and recovery action permitted by law, as determined by the Committee. For the avoidance of doubt, except as set forth in Section 4(d) below, in no event may the Company Group accept an amount that is less than the amount of Erroneously Awarded Compensation in satisfaction of an Executive Officer’s obligations hereunder unless it cannot be received as provided for herein.
(c)To the extent that an Executive Officer fails to repay all Erroneously Awarded Compensation to the Company Group when due (as determined in accordance with Section 4(b) above), the Company shall, or shall cause one or more other members of the Company Group to, take all actions reasonable and appropriate under the circumstances to recover such Erroneously Awarded Compensation from the applicable Executive Officer.
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(d)Notwithstanding anything herein to the contrary, the Company shall not be required to take the actions contemplated by Section 4(b) above if the following conditions are met and the Committee determines that recovery would be impracticable:
(i)The direct expenses paid to a third party to assist in enforcing the Policy against an Executive Officer would exceed the amount to be recovered, after the Company has made a reasonable attempt to recover the applicable Erroneously Awarded Compensation, such attempts have been documented and such documentation is provided to Nasdaq.
(ii)Recovery would violate home country law where that law was adopted prior to November 28, 2022, provided that, before determining that it would be impracticable to recover any amount of Erroneously Awarded Compensation based on violation of home country law, the Company has obtained an opinion of home country counsel, acceptable to Nasdaq, that recovery would result in such a violation and a copy of the opinion is provided to Nasdaq; or
(iii)Recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the Company Group, to fail to meet the requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and regulations thereunder.
5.Reporting and Disclosure. The Company shall file all disclosures with respect to this Policy in accordance with the requirement of the Federal securities laws, including the disclosure required by the applicable SEC filings.
6.Indemnification Prohibition. No member of the Company Group shall be permitted to indemnify any Executive Officer against (i) the loss of any Erroneously Awarded Compensation that is repaid, returned or recovered pursuant to the terms of this Policy, or (ii) any claims relating to the Company Group’s enforcement of its rights under this Policy, in either case, where such indemnity is otherwise prohibited by applicable law or the Listing Standards. Subject to compliance with applicable law and the Listing Standards, the foregoing limitation on indemnification shall not obviate, amend or otherwise supersede any rights to indemnification, to which an Executive Officer may be entitled under the Company’s charter documents, as a matter of law, individual indemnification agreement or contract or otherwise, or any other power or obligation that any member of the Company Group may have to indemnify such Executive Officer or defend, or hold them harmless.
7.Effective Date. This Policy shall be effective as of the Effective Date.
8.Amendment; Termination. The Committee may amend this Policy from time to time in its discretion and shall amend this Policy as it deems necessary, including as and when it determines that it is legally required by any Federal securities laws or the Listing Standards. The Committee may terminate this Policy at any time. Notwithstanding anything in this Section 9 to the contrary, no amendment or termination of this Policy shall be effective if such amendment or termination would (after taking into account any actions taken by the Company contemporaneously with such amendment or termination) cause the Company to violate any Federal securities laws or the Listing Standards.
9.Other Recoupment Rights; No Additional Payments. This Policy shall be incorporated by reference into and shall apply to all incentive, bonus, equity, equity-based and compensation plans, agreements, and awards outstanding as of the Effective Date or entered into on or after the Effective Date. The Committee may require that any employment agreement, equity award agreement, or any other agreement entered into on or after the Effective Date shall, as a condition to the grant of any benefit thereunder, require an Executive Officer to agree to abide by the terms of this Policy. The Committee intends that this Policy is a supplement to any other clawback policies in effect now or in the future at the Company, including but not limited to the Company’s Compensation Clawback Policy, as may be amended and/or restated and in effect from time to time. Any right of recoupment under this Policy is in
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addition to, and not in lieu of, any other remedies or rights of recoupment that may be available to the Company Group under applicable law, regulation or rule or pursuant to the terms of the Company’s Compensation Clawback Policy and/or any other similar policy in any employment agreement, equity award plan or agreement, or similar agreement and any other legal remedies available to the Company Group; provided, however, if such other agreement or policy provides that a greater amount of compensation shall be subject to clawback, such other policy shall apply to the amount in excess of the amount subject to clawback under this Policy; provided further, this Policy shall not permit or result in double-recovery for compensation under this Policy that is otherwise subject to recovery under the Company’s Clawback Policy as the intent is only for one-time recovery.
10.Successors. This Policy shall be binding and enforceable against all Executive Officers and their beneficiaries, heirs, executors, administrators or other legal representatives.
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Exhibit A
WEATHERFORD INTERNATIONAL PLC
EXECUTIVE OFFICER CLAWBACK POLICY
ACKNOWLEDGEMENT FORM
By signing below, the undersigned acknowledges and confirms that the undersigned has received and reviewed a copy of the Weatherford International plc Executive Officer Clawback Policy (the “Policy”). Capitalized terms used but not otherwise defined in this Acknowledgement Form (this “Acknowledgement Form”) shall have the meanings ascribed to such terms in the Policy.
By signing this Acknowledgement Form, the undersigned acknowledges and agrees that the undersigned is and will continue to be subject to the Policy and that the Policy will apply both during and after the undersigned’s employment with the Company Group. Further, by signing below, the undersigned agrees to abide by the terms of the Policy, including, without limitation, by returning any Erroneously Awarded Compensation (as defined in the Policy) to the Company Group to the extent required by, and in accordance with the Policy.
Signature
Print Name
Date
Exhibit A