Civeo Corp (Form: 10-Q, Received: 04/28/2016 14:07:14)

ITEM 1. Financial Statements

CIVEO CORPORATION

UNAUDITED CO NSOLIDAT ED STATEMENTS OF OPERATIONS

(In Thousands , Except Per Share Amounts )

	THREE MONTHS ENDED MARCH 31,
	201 6			201 5
Revenues:
Service and other	$	91,767		$	168,132
Product		3,269			2,855
		95,036			170,987
Costs and expenses:
Service and other costs		61,377			99,839
Product costs		4,566			3,072
Selling, general and administrative expenses		13,117			16,686
Depreciation and amortization expense		33,555			42,446
Impairment expense		8,400			2,738
Other operating expense		218			1,330
		121,233			166,111
Operating income (loss)		(26,197	)		4,876

Interest expense to third-parties, net of capitalized interest		(4,944	)		(5,609	)
Loss on extinguishment of debt		(302	)		--
Interest income		86			1,122
Other income		112			998
Income (loss) before income taxes		(31,245	)		1,387
Income tax benefit (provision)		4,571			(1,157	)
Net income (loss)		(26,674	)		230
Less: Net income attributable to noncontrolling interest		148			246
Net loss attributable to Civeo Corporation.	$	(26,822	)	$	(16	)


Per Share Data (see Note 6 )
Basic net income (loss) per share attributable to Civeo Corporation common shareholders	$	(0.25	)	$	0.00

Diluted net income (loss) per share attributable to Civeo Corporation common shareholders.	$	(0.25	)	$	0.00

Weighted average number of common shares outstanding:
Basic		106,814			106,460
Diluted.		106,814			106,460

The accompanying notes are an integral part of these financial statements.

CIVEO CORPORATION

UNAUDITED CO NSOLIDAT ED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In Thousands)

	THREE MONTHS ENDED MARCH 31 ,
	201 6			201 5

Net income (loss)	$	(26,674	)	$	230

Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment, net of taxes of zero and $2.4 million, respectively		29,399			(111,024	)
Total other comprehensive income (loss), net of tax		29,399			(111,024	)

Comprehensive income (loss)		2,725			(110,794	)
Comprehensive (income) loss attributable to noncontrolling interest		(191	)		(60	)
Comprehensive income (loss) attributable to Civeo Corporation.	$	2,534		$	(110,854	)

The accompanying notes are an integral part of these financial statements.

CIVEO CORPORATION

CO NSOLIDAT ED BALANCE SHEETS

(In Thousands)

	MARCH 31, 201 6			DECEMBER 31, 201 5
	(Unaudited)
ASSETS

Current assets:
Cash and cash equivalents	$	2,968		$	7,837
Accounts receivable, net		63,315			61,467
Inventories		5,163			5,631
Prepaid expenses		15,895			11,712
Other current assets		4,784			3,312
Total current assets		92,125			89,959

Property, plant and equipment, net		946,056			931,914
Other intangible assets, net		35,219			35,309
Other noncurrent assets		9,879			9,347
Total assets	$	1,083,279		$	1,066,529

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:
Accounts payable	$	28,476		$	24,609
Accrued liabilities		12,568			14,834
Income taxes		1,102			1,104
Current portion of long-term debt		15,964			17,461
Deferred revenue		7,124			7,747
Other current liabilities		671			493
Total current liabilities		65,905			66,248

Long-term debt, less current maturities		393,998			379,416
Deferred income taxes		23,031			25,391
Other noncurrent liabilities		32,787			31,704
Total liabilities		515,721			502,759

Commitments and contingencies (Note 9)

Shareholders’ Equity:
Common shares (no par value; 550,000,000 shares authorized, 107,745,785 shares and 107,470,861 shares issued, respectively, and 107,684,417 shares and 107,470,861 shares outstanding, respectively)		--			--
Additional paid-in capital		1,307,045			1,305,930
Accumulated deficit		(403,198	)		(376,376	)
Common shares held in treasury at cost, 61,368 and zero shares, respectively		(52	)		--
Accumulated other comprehensive loss		(336,953	)		(366,309	)
Total Civeo Corporation shareholders’ equity		566,842			563,245
Noncontrolling interest		716			525
Total shareholders’ equity		567,558			563,770
Total liabilities and shareholders’ equity	$	1,083,279		$	1,066,529

The accompanying notes are an integral part of these financial statements.

CIVEO CORPORATION

UNAUDITED CO NSOLIDAT ED STATEMENTS OF

CHANGES IN SHAREHOLDERS’ EQUITY

(In Thousands)

	Attributable to Civeo
	Common S hares
	Par Value		Additional Paid-in Capital		Accumulated Deficit			Treasury Shares			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interest			Total S hare holders’ Equity

Balance, December 31, 201 4	$	1,067	$	1,300,042	$	(244,617	)	$	--		$	(198,491	)	$	2,108		$	860,109
Net income (loss)		--		--		(16	)		--			--			246			230
Currency translation adjustment.		--		--		--			--			(110,838	)		(186	)		(111,024	)
Share-based compensation.		7		1,719		--			(118	)		--			--			1,608
Balance, March 31, 2015	$	1,074	$	1,301,761	$	(244,633	)	$	(118	)	$	(309,329	)	$	2,168		$	750,923


Balance, December 31, 201 5	$	--	$	1,305,930	$	(376,376	)	$	--		$	(366,309	)	$	525		$	563,770
Net income (loss)		--		--		(26,822	)		--			--			148			(26,674	)
Currency translation adjustment.		--		--		--			--			29,356			43			29,399
Share-based compensation.		--		1,115		--			(52	)		--			--			1,063
Balance, March 31, 2016	$	--	$	1,307,045	$	(403,198	)	$	(52	)	$	(336,953	)	$	716		$	567,558

The accompanying notes are an integral part of these financial statements.

CIVEO CORPORATION

UNAUDITED CO NSOLIDAT ED STATEMENTS OF CASH FLOWS

(In Thousands)

	THREE MONTHS ENDED MARCH 31,
	201 6			201 5

Cash flows from operating activities:
Net income (loss)	$	(26,674	)	$	230
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		33,555			42,446
Impairment charge		8,400			2,738
Inventory write-down		--			1,015
Loss on extinguishment of debt		302			--
Deferred income tax benefit		(7,592	)		(801	)
Non-cash compensation charge		1,115			1,223
Gains on disposals of assets		(39	)		(341	)
Provision for loss on receivables, net of recoveries		(135	)		730
Other, net		1,082			845
Changes in operating assets and liabilities:
Accounts receivable		4,353			19,835
Inventories		792			1,256
Accounts payable and accrued liabilities		(302	)		(10,680	)
Taxes payable		(2,395	)		(6,483	)
Other current assets and liabilities, net		(1,184	)		(3,111	)
Net cash flows provided by operating activities		11,278			48,902

Cash flows from investing activities:
Capital expenditures, including capitalized interest		(4,761	)		(10,702	)
Proceeds from disposition of property, plant and equipment		1,599			1,127
Other, net		(302	)		--
Net cash flows used in investing activities		(3,464	)		(9,575	)

Cash flows from financing activities:
Proceeds from issuance of common stock		--			500
Revolving credit borrowings		117,106			--
Revolving credit repayments		(99,021	)		--
Term loan borrowings		--			--
Term loan repayments		(29,055	)		--
Debt issuance costs		(2,035	)		--
Net cash flows provided by (used in) financing activities		(13,005	)		500

Effect of exchange rate changes on cash		322			(23,344	)
Net change in cash and cash equivalents		(4,869	)		16,483
Cash and cash equivalents, beginning of period		7,837			263,314

Cash and cash equivalents, end of period	$	2,968		$	279,797

The accompanying notes are an integral part of these financial statements.

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

1.	DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of the Business

We are one of the largest integrated providers of longer-term and temporary remote site accommodations, logistics and facility management services to the natural resource industry. Our scalable modular facilities provide long-term and temporary workforce accommodations where traditional accommodations and related infrastructure is insufficient, inaccessible or not cost effective. Once facilities are deployed in the field, we also provide catering and food services, housekeeping, laundry, facility management, water and wastewater treatment, power generation, communications and redeployment logistics. Our accommodations support workforces in the Canadian oil sands and in a variety of oil and natural gas drilling, mining and related natural resource applications as well as disaster relief efforts, primarily in Canada, Australia and the United States. We operate in three principal reportable business segments – Canadian, Australian and U.S.

On May 30, 2014, Oil States International, Inc. (Oil States) spun-off its Accommodations Segment (Accommodations) into a standalone, publicly traded Delaware corporation (Civeo US). In accordance with the Separation and Distribution Agreement, the two companies were separated by Oil States distributing to its stockholders all 106,538,044 shares of common stock of Civeo US it held after the market closed on May 30, 2014 (the Spin-Off).

On July 17, 2015, we changed our place of incorporation, pursuant to which Civeo Corporation, a British Columbia, Canada limited company formerly named Civeo Canadian Holdings ULC (Civeo Canada), became the publicly traded parent company of the Civeo group of companies (the Redomicile Transaction). The Redomicile Transaction was effected pursuant to an Agreement and Plan of Merger, dated as of April 6, 2015, between Civeo US, Civeo US Merger Co, a Delaware corporation and wholly owned subsidiary of Civeo Canada (US Merger Co), and Civeo Canada. At the effective time of the merger, (i) US Merger Co was merged with Civeo US, with Civeo US surviving the merger as a wholly owned subsidiary of Civeo Canada, and (ii) each issued share of Civeo US common stock, other than those shares of Civeo US common stock held by Civeo US in treasury, was effectively transferred to Civeo Canada and converted into one common share, no par value, of Civeo Canada. An aggregate of approximately 107.5 million Civeo Canada common shares were issued at the effective time as merger consideration. The Civeo Canada common shares are listed on the NYSE under the symbol “CVEO,” the same symbol under which the Civeo US common stock traded prior to the effective time.

On February 18, 2016, we amended our credit facility to, among other things, (i) allow us to borrow under new Canadian tranches of the credit facility, (ii) substantially reduce both the existing U.S. term loan and the Canadian revolving credit facility and (iii) increase the maximum leverage ratio allowed under the credit facility. For further information, please see Note 7 – Debt.

We incurred costs related to the Redomicile Transaction totaling $1.0 million and $1.2 million for the three months ended March 31, 2016 and 2015, respectively. In addition, we incurred costs related to the amendment to our credit facility totaling $2.1 million for the three months ended March 31, 2016. $2.0 million has been capitalized as debt issuance costs, and the remaining $0.1 million is included in interest expense.

Basis of Presentation

Unless otherwise stated or the context otherwise indicates, all references in these consolidated financial statements to “Civeo,” “the Company,” “us,” “our” or “we” for the time periods prior to July 17, 2015 refer to Civeo US and its consolidated subsidiaries. For time periods after July 17, 2015, these terms refer to Civeo Canada and its consolidated subsidiaries.

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

The accompanying unaudited consolidated financial statements of Civeo have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) pertaining to interim financial information. Certain information in footnote disclosures normally included in financial statements prepared in accordance with Generally Accepted Accounting Principles (GAAP) has been condensed or omitted pursuant to these rules and regulations. The unaudited financial statements included in this report reflect all the adjustments, consisting of normal recurring adjustments, which the Company considers necessary for a fair presentation of the results of operations for the interim periods covered and for the financial condition of the Company at the date of the interim balance sheet. Results for the interim periods are not necessarily indicative of results for the full year. Certain reclassifications have been made to the December 31, 2015 consolidated balance sheet to conform to current year presentation.

The preparation of consolidated financial statements in conformity with GAAP requires the use of estimates and assumptions by management in determining the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. If the underlying estimates and assumptions upon which the financial statements are based change in future periods, actual amounts may differ from those included in the accompanying consolidated financial statements.

The financial statements included in this report should be read in conjunction with our audited financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2015.

2.	RECENT ACCOUNTING PRONOUNCEMENTS

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (the FASB), which are adopted by us as of the specified effective date. Unless otherwise discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on our consolidated financial statements upon adoption.

In March 2016, the FASB issued Accounting Standards Update (ASU) 2016-09, “Improvements to Employee Share-Based Payment Accounting” (ASU 2016-09). This new standard requires companies to recognize the income tax effects of awards in the income statement when the awards vest or are settled. ASU 2016-09 is effective for financial statements issued for reporting periods beginning after December 15, 2016 and interim periods within the reporting periods. We are currently evaluating the impact of this new standard on our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases” (Topic 842), which replaces the existing guidance for lease accounting, Leases (Topic 840). ASU 2016-02 requires lessees to recognize a lease liability and a right-of-use asset for all leases with terms longer than 12 months. The guidance is effective for financial statements issued for reporting periods beginning after December 15, 2018 and interim periods within the reporting periods. An entity will be required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. We are currently evaluating the impact of this new standard on our consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03 “Interest - Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs” (ASU 2015-03). ASU 2015-03 simplifies the presentation of debt issuance costs by requiring that such costs be presented as a deduction from the corresponding debt liability. The guidance is effective for financial statements issued for reporting periods beginning after December 15, 2015 and interim periods within the reporting periods and requires retrospective presentation. Effective with this quarterly report on Form 10-Q for the quarter ended March 31, 2016, we have adopted the provisions of ASU 2015-03. At December 31, 2015, as a result of our adoption of ASU 2015-03, we reclassified $4.7 million of debt issuance costs to reduce our recognized debt liabilities from other current assets ($1.3 million) and other non-current assets ($3.4 million) on the accompanying unaudited consolidated balance sheet. A portion of our debt issuance costs relate to revolving lines of credit and will accordingly continue to be included in “Other current assets” or “Other non-current assets”.

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

In May 2014, the FASB issued ASU 2014-09 establishing Accounting Standards Codification (ASC) Topic 606, “Revenue from Contracts with Customers” (ASC 606). ASC 606 establishes a comprehensive new revenue recognition model designed to depict the transfer of goods or services to a customer in an amount that reflects the consideration the entity expects to be entitled to receive in exchange for those goods or services and requires significantly enhanced revenue disclosures. The standard is effective for annual reporting periods beginning after December 15, 2017. Accordingly, we plan to adopt this standard in the first quarter of 2018. ASC 606 allows either full retrospective or modified retrospective transition, and early adoption is not permitted. We continue to evaluate both the impact of this new standard on our consolidated financial statements and the transition method we will utilize for adoption.

3.	FAIR VALUE MEASUREMENTS

Our financial instruments consist of cash and cash equivalents, receivables, payables and debt instruments. We believe that the carrying values of these instruments on the accompanying consolidated balance sheets approximate their fair values.

As of March 31, 2016 and December 31, 2015, we believe the carrying value of our floating-rate debt outstanding under our term loans and revolving credit facilities approximates their fair values because their terms include short-term interest rates and exclude penalties for prepayment. We estimated the fair value of our floating-rate term loan and revolving credit facilities using significant other observable inputs, representative of a Level 2 fair value measurement, including terms and credit spreads for these loans.

During the first quarter of 2016 and 2015, we wrote down certain long-lived assets to their fair values. Our estimate of fair value required us to use significant unobservable inputs, representative of Level 3 fair value measurements, including numerous assumptions with respect to future circumstances, such as future oil, coal and natural gas prices, anticipated spending by our customers, the cost of capital and industry and/or local market conditions that might directly impact each of the asset groups’ operations in the future and are therefore uncertain.

4.	DETAILS OF SELECTED BALANCE SHEET ACCOUNTS

Additional information regarding selected balance sheet accounts at March 31, 2016 and December 31, 2015 is presented below (in thousands):

	March 31, 2016			December 31, 201 5
Accounts receivable, net:
Trade	$	40,758		$	44,650
Unbilled revenue		22,376			16,649
Other		1,163			1,289
Total accounts receivable		64,297			62,588
Allowance for doubtful accounts		(982	)		(1,121	)
Total accounts receivable, net	$	63,315		$	61,467

	March 31, 2016		December 31, 201 5
Inventories:
Finished goods and purchased products	$	2,009	$	1,854
Work in process		593		1,260
Raw materials		2,561		2,517
Total inventories	$	5,163	$	5,631

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

	Estimated Useful Life (in years)			March 31, 2016			December 31, 201 5
Property, plant and equipment, net:
Land				$	49,967		$	47,825
Accommodations assets	3	-	15		1,578,680			1,482,842
Buildings and leasehold improvements	3	-	20		28,355			29,099
Machinery and equipment	4	-	15		9,786			9,183
Office furniture and equipment	3	-	7		30,745			29,172
Vehicles	3	-	5		15,542			15,412
Construction in progress					30,576			52,558
Total property, plant and equipment					1,743,651			1,666,091
Accumulated depreciation					(797,595	)		(734,177	)
Total property, plant and equipment, net				$	946,056		$	931,914

	March 31, 2016		December 31, 201 5
Accrued liabilities:
Accrued compensation	$	8,674	$	11,726
Accrued taxes, other than income taxes		1,713		963
Accrued interest		201		12
Other		1,980		2,133
Total accrued liabilities	$	12,568	$	14,834

5.	IMPAIRMENT CHARGES

Quarter ended March 31, 2016. During the first quarter of 2016, we recorded an impairment expense of $8.4 million, resulting from the impairment of fixed assets in our U.S. segment, due to a continued reduction of U.S. drilling activity in the Bakken Shale region. These fixed assets were written down to their fair value of $3.8 million. We assessed the carrying values of the asset groups to determine if they continued to be recoverable based on estimated future cash flows. Based on the assessment, the carrying values were determined to not be recoverable, and we proceeded to compare the fair value of those assets groups to their respective carrying values.

Quarter ended March 31, 2015. During the first quarter of 2015, we made the decision to dispose of our manufacturing facility in Johnstown, Colorado. Accordingly, the facility met the criteria of held for sale, and its carrying value was adjusted downward to $8.7 million, which represents its estimated fair value less the cost to sell. We recorded a pre-tax impairment expense of $2.7 million and an additional $1.1 million write-down of our inventory as a result. During the fourth quarter of 2015, we completed the sale of the facility.

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

6.	EARNINGS PER SHARE

The calculation of earnings per share attributable to the Company is presented below for the periods indicated (in thousands, except per share amounts):

	THREE MONTHS ENDED MARCH 31,
	2016			201 5
Basic Loss per Share
Net loss attributable to Civeo	$	(26,822	)	$	(16	)
Less: undistributed net income to participating securities		--			--
Net loss attributable to Civeo’s common shareholders - basic	$	(26,822	)	$	(16	)

Weighted average common shares outstanding - basic		106,814			106,460

Basic loss per share	$	(0.25	)	$	(0.00	)

Diluted Loss per Share
Net loss attributable to Civeo’s common shareholders - basic	$	(26,822	)	$	(16	)
Less: undistributed net income to participating securities		--			--
Net loss attributable to Civeo’s common shareholders - diluted	$	(26,822	)	$	(16	)


Weighted average common shares outstanding - basic		106,814			106,460
Effect of dilutive securities		--			--
Weighted average common shares outstanding - diluted		106,814			106,460

Diluted loss per share	$	(0.25	)	$	(0.00	)

DEBT

As of March 31, 2016 and December 31, 2015, long-term debt consisted of the following (in thousands):

	March 31, 2016		December 31, 2015
U.S. term loan, which matures on May 28, 2019; principal repayable on May 28, 2019; weighted average interest rate of 3.2% for the three month period ended March 31, 2016	$	24,375	$	49,375
Canadian term loan, which matures on May 28, 2019; 1.25% of aggregate principal repayable per quarter beginning December 31, 2015; weighted average interest rate of 3.4% for the three month period ended March 31, 2016		316,260		300,165
U.S. revolving credit facility, which matures on May 28, 2019, with available commitments up to $50.0 million; weighted average interest rate of 5.0% for the three month period ended March 31, 2016		800		--
Canadian revolving credit facility, which matures on May 28, 2019, with available commitments up to $100.0 million; weighted average interest rate of 3.6% for the three month period ended March 31, 2016		41,634		52,020
Canadian revolving credit facility, which matures on May 28, 2019, with available commitments up to $100.0 million; no borrowings outstanding as of March 31, 2016		--		--
Australian revolving credit facility, which matures on May 28, 2019, with available commitments up to $100.0 million; weighted average interest rate of 4.9% for the three month period ended March 31, 2016		32,239		--
		415,308		401,560
Less: Unamortized debt issuance costs		5,346		4,683
Total debt		409,962		396,877
Less: Current portion of long-term debt, including unamortized debt issuance costs, net		15,964		17,461
Long-term debt, less current maturities	$	393,998	$	379,416

Interest expense on the unaudited consolidated statements of operations is net of capitalized interest of zero and $0.4 million for the three month periods ended March 31, 2016 and 2015, respectively.

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

Amended Credit Facility

As of December 31, 2015, our revolving credit facility consisted of (i) a $375.0 million, 5-year revolving credit facility allocated as follows: (A) a $50.0 million senior secured revolving credit facility in favor of Civeo, as borrower, (B) a $100.0 million senior secured revolving credit facility in favor of certain of our Canadian subsidiaries, as borrowers, (C) a $125.0 million senior secured revolving credit facility in favor of certain of our Canadian subsidiaries, as borrowers, and (D) a $100.0 million senior secured revolving credit facility in favor of one of our Australian subsidiaries, as borrower, and (ii) a $375.0 million, 5-year term loan facility in favor of Civeo (collectively, the Amended Credit Facility).

On February 18, 2016, the second amendment to the Amended Credit Facility became effective, which provided for the following:

●

Civeo Management LLC, an indirect wholly owned subsidiary of the Company, became a co-borrower under the US$50.0 million U.S. revolving credit facility under the Amended Credit Facility;

●

The partial prepayment of the U.S. term loan under the Amended Credit Facility in the aggregate principal amount of US$25.0 million and the reduction by US$25.0 million of the aggregate revolving loan commitments under the Canadian revolving credit facility under the Amended Credit Facility to a maximum principal amount of US$100.0 million;

●

(i) Increased the interest rate margin by 0.25% when the leverage ratio is less than 1.50x (by removing the lowest level in the leverage-based interest rate margin grid), (ii) established two additional levels to the total leverage-based grid such that the interest rates for the loans range from LIBOR +2.25% to LIBOR +5.00% and (iii) increased the undrawn commitment fee from a range of 0.45% to 0.90% to a range of 0.51% to 1.13% based on total leverage;

●

Adjusted the maximum leverage ratio financial covenant, as follows:

Period Ended	Maximum Leverage Ratio

December 31, 2015	4.00	:	1.00
March 31, 2016	4.25	:	1.00
June 30, 2016	5.25	:	1.00
September 30, 2016	5.50	:	1.00
December 31, 2016	5.50	:	1.00
March 31, 2017	5.25	:	1.00
June 30, 2017	5.25	:	1.00
September 30, 2017	5.00	:	1.00
December 31, 2017	5.00	:	1.00
March 31, 2018	4.75	:	1.00
June 30, 2018	3.75	:	1.00
September 30, 2018 & thereafter	3.50	:	1.00

●

Included a provision for a mandatory prepayment of the revolving credit facilities under the Amended Credit Facility in the event the Company and its subsidiaries hold an aggregate amount of cash exceeding US$40.0 million for a period of more than three consecutive business days, such mandatory prepayment to be made within two business days in an amount equal to the lesser of (a) an amount sufficient to reduce the aggregate amount of cash and permitted investments on hand at the Company and its subsidiaries to less than US$40.0 million or (b) an amount sufficient to repay all of the outstanding commitments under the revolving credit facilities under the Amended Credit Facility; and

●

Other technical changes and amendments to the Amended Credit Facility.

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

As a result of the second amendment, we recognized a loss during the first quarter of 2016 of approximately $0.3 million related to unamortized debt issuance costs, which is included in “Loss on extinguishment of debt” on the accompanying unaudited consolidated statements of operations.

U.S. dollar amounts outstanding under the Amended Credit Facility bear interest at a variable rate equal to LIBOR plus a margin of 2.25% to 5.00%, or a base rate plus 1.25% to 4.00%, in each case based on a ratio of our total leverage to EBITDA (as defined in the Amended Credit Facility). Canadian dollar amounts outstanding under the Amended Credit Facility bear interest at a variable rate equal to CDOR plus a margin of 2.25% to 5.00%, or a base rate plus a margin of 1.25% to 4.00%, in each case based on a ratio of our consolidated total leverage to EBITDA (as defined in the Amended Credit Facility). Australian dollar amounts outstanding under the Amended Credit Facility bear interest at a variable rate equal to BBSY plus a margin of 2.25% to 5.00%, based on a ratio of our consolidated total leverage to EBITDA (as defined in the Amended Credit Facility).

The Amended Credit Facility contains customary affirmative and negative covenants that, among other things, limit or restrict (i) subsidiary indebtedness, liens and fundamental changes, (ii) asset sales, (iii) margin stock, (iv) specified acquisitions, (v) restrictive agreements, (vi) transactions with affiliates and (vii) investments and other restricted payments, including dividends and other distributions. Specifically, we must maintain an interest coverage ratio, defined as the ratio of consolidated EBITDA (as defined in the Amended Credit Facility) to consolidated interest expense, of at least 3.0 to 1.0 and our maximum leverage ratio, defined as the ratio of total debt to consolidated EBITDA, of no greater than 4.25 to 1.0 (as of March 31, 2016). As noted above, the permitted maximum leverage ratio changes over time. Each of the factors considered in the calculations of these ratios are defined in the Amended Credit Facility. EBITDA and consolidated interest, as defined, exclude goodwill and asset impairments, debt discount amortization and other non-cash charges. We were in compliance with these covenants as of March 31, 2016.

We have 15 lenders in our Amended Credit Facility with commitments ranging from $1.2 million to $135.7 million.

8.	INCOME TAXES

The Company’s operations are conducted through its various subsidiaries in a number of countries throughout the world. The Company has provided for income taxes based upon the tax laws and rates in the countries in which operations are conducted and income is earned. For the quarter ended March 31, 2016, Civeo Canada is the public parent registered under the laws of British Columbia, Canada. For the quarter ended March 31, 2015, Civeo US, a Delaware corporation, was the public parent registered in the U.S.

We operate primarily in three jurisdictions, Canada , Australia and the U.S., where statutory tax rates range from 27% to 35%. Our effective tax rate will vary period to period based on changes in earnings mix between these different jurisdictions.

We compute our quarterly taxes under the effective tax rate method by applying an anticipated annual effective rate to our year-to-date income, except for significant unusual or extraordinary transactions. As Australia and the U.S. are now loss jurisdictions for tax accounting purposes, Australia and the U.S. have been removed from the annual effective tax rate computation for purposes of computing the interim tax provision. Income taxes for significant and unusual or extraordinary transactions are computed and recorded in the period that the specific transaction occurs.

Our income tax benefit for the three months ended March 31, 2016 totaled $4.6 million, or 14.6% of pretax income, compared to income tax expense of $1.2 million, or 83.4% of pretax income, for the three months ended March 31, 2015. The effective tax rates in 2016 and 2015 were impacted by discrete items totaling $0.9 million and $0.5 million, respectively.

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

9.	COMMITMENTS AND CONTINGENCIES

We are a party to various pending or threatened claims, lawsuits and administrative proceedings seeking damages or other remedies concerning our commercial operations, products, employees and other matters, including warranty and product liability claims as a result of our products or operations. Although we can give no assurance about the outcome of pending legal and administrative proceedings and the effect such outcomes may have on us, management believes that any ultimate liability resulting from the outcome of such proceedings, to the extent not otherwise provided for or covered by insurance, will not have a material adverse effect on our consolidated financial position, results of operations or liquidity.

10.

ACCUMULATED OTHER COMPREHENSIVE LOSS

Our accumulated other comprehensive loss decreased $29.3 million from $366.3 million at December 31, 2015 to $337.0 million at March 31, 2016, as a result of foreign currency exchange rate differences. Changes in other comprehensive loss during the first quarter of 2016 were primarily driven by the Australian dollar and Canadian dollar increasing in value compared to the U.S. dollar. Excluding intercompany balances, our Canadian dollar and Australian dollar functional currency net assets totaled approximately C$0.2 billion and A$0.5 billion, respectively, at March 31, 2016.

11.

S HARE BASED COMPENSATION

Our employees and non-employee directors participate in the 2014 Equity Participation Plan of Civeo Corporation (the Civeo Plan). The Civeo Plan authorizes the Board of Directors to grant options, awards of restricted shares, performance awards, dividend equivalents, awards of deferred shares, and share payments to our employees and non-employee directors. As of March 31, 2016, no more than 4.0 million Civeo common shares may be awarded under the Civeo Plan.

Upon effectiveness of the Redomicile Transaction, Civeo Canada assumed the Civeo US employee equity plans and related award agreements, including all options and awards issued or granted under such plans, as well as certain Civeo US benefit plans and agreements.

Outstanding Awards

Options. Compensation expense associated with options recognized in the three month periods ended March 31, 2016 and 2015 totaled $ 0.1 million and $ 0.1 million, respectively. At March 31, 2016, unrecognized compensation cost related to options was $ 0.2 million, which is expected to be recognized over a weighted average period of 1.5 years.

Restricted S hare / Deferred Share Awards. On February 23, 2016, we granted 231,934 restricted share and deferred share awards under the Civeo Plan, which vest in three equal annual installments beginning on February 23, 2017.

Compensation expense associated with restricted share awards and deferred share awards recognized in the three month periods ended March 31, 2016 and 2015 totaled $1.1 million and $1.1 million, respectively. The total fair value of restricted share awards and deferred share awards that vested during the three months ended March 31, 2016 and 2015 was $0.3 million and $0.6 million, respectively.

At March 31, 2016, unrecognized compensation cost related to restricted share awards and deferred share awards was $6.5 million, which is expected to be recognized over a weighted average period of 2.3 years.

Phantom Share Awards . On February 23, 2016, we granted 2,917,130 phantom share awards under the Civeo Plan, which vest in three equal annual installments beginning on February 23, 2017. We also granted 3,099,194 phantom share awards under the Canadian Long-Term Incentive Plan, which vest in three equal annual installments beginning on February 23, 2017.

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

During the three month periods ended March 31, 2016 and 2015, we recognized compensation expense associated with phantom shares totaling $0.2 million and $0.3 million, respectively. At March 31, 2016, unrecognized compensation cost related to phantom shares was $9.4 million, as remeasured at March 31, 2016, which is expected to be recognized over a weighted average period of 2.8 years.

Performance Awards . On February 23, 2016, we granted 2,400,606 performance awards under the Civeo Plan, which cliff vest in three years on February 23, 2019. These awards will be earned in amounts between 0% and 200% of the participant’s target performance share award, based on the payout percentage associated with Civeo’s relative total shareholder return rank among a peer group of 12 other companies. Because shareholder approval is required to grant these awards as equity awards to be settled in shares, as of March 31, 2016, the awards have been accounted for as a liability that is remeasured at each reporting date.

During the three month periods ended March 31, 2016 and 2015, we recognized compensation expense associated with performance awards totaling $0.1 million and zero, respectively. At March 31, 2016, unrecognized compensation cost related to performance shares was $3.5 million, as remeasured at March 31, 2016, which is expected to be recognized over a weighted average period of 2.8 years.

12.

SEGMENT AND RELATED INFORMATION

In accordance with current accounting standards regarding disclosures about segments of an enterprise and related information, we have identified the following reportable segments: Canada, Australia and U.S., which represent our strategic focus on workforce accommodations.

Financial information by business segment for each of the three months ended March 31, 2016 and 2015 is summarized in the following table (in thousands):

	Total Revenues			Less: Intersegment Revenues			Revenues from unaffiliated customers		Depreciation and amortization		Operating income (loss)			Capital expenditures			Total assets
Three months ended March 31, 201 6
Canada	$	65,522			--		$	65,522	$	20,339	$	(9,699	)	$	1,047		$	605,414
Australia		25,510			--			25,510		11,178		(1,622	)		607			432,314
U.S.		4,004			--			4,004		1,906		(13,599	)		--			58,633
Corporate and eliminations		--			--			--		132		(1,277	)		3,107			(13,082	)
Total	$	95,036		$	--		$	95,036	$	33,555	$	(26,197	)	$	4,761		$	1,083,279

Three months ended March 31, 201 5
Canada	$	116,900			--		$	116,900	$	24,758	$	12,120		$	6,453		$	900,174
Australia		41,859			--			41,859		13,913		6,727			3,267			620,378
U.S.		14,624			(2,396	)		12,228		3,679		(6,894	)		1,116			120,802
Corporate and eliminations		(2,396	)		2,396			--		96		(7,077	)		(134	)		53,445
Total	$	170,987		$	--		$	170,987	$	42,446	$	4,876		$	10,702		$	1,694,799

Cautionary Statement Regarding Forward-Looking Statements

This quarterly report on Form 10-Q contains certain “forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the Exchange Act). The Private Securities Litigation Reform Act of 1995 provides safe harbor provisions for forward-looking information. The forward-looking statements can be identified by the use of forward-looking terminology including "may," "expect," "anticipate," "estimate," "continue," "believe" or other similar words. A ctual results could differ materially from those projected in the forward-looking statements as a result of a number of important factors. For a discussion of known material factors that could affect our results, please refer to “Risk Factors,” “Forward-Looking Statements,” and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K for the year ended December 31, 201 5 and our subsequent SEC filings . Sho uld one or more of these risks or uncertainties materialize, or should the assumptions prove incorrect, actual results may differ materially from those expected, estimated or projected. Our management believes these forward-looking statements are reasonable. However, you should not place undue reliance on these forward-looking statements, which are based only on our current expectations and are not guarantees of future performance. All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the foregoing. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to publicly update or revise any of them in light of new information, future events or otherwise.

In addition, in certain places in this quarterly report, we refer to reports published by third parties that purport to describe trends or developments in the energy industry. We do so for the convenience of our s hare holders and in an effort to provide information available in the market that will assist our investors in a better understanding of the market environment in which we operate. However, we specifically disclaim any responsibility for the accuracy and completeness of such information and undertake no obligation to update such information.

British Columbia, Canada	98-1253716
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Three Allen Center, 333 Clay Street, Suite 4980,	77002
Houston, Texas	(Zip Code)
(Address of principal executive offices)

Large Accelerated Filer [ ]	Accelerated Filer [X]

Non-Accelerated Filer [ ] (Do not check if a smaller reporting company)	Smaller Reporting Company [ ]

		Page No.
	Part I -- FINANCIAL INFORMATION

Item 1.	Financial Statements:

	Consolidated Financial Statements
	Unaudited Consolidated Statements of Operations for the Three Month Periods Ended March 31, 2016 and 2015	3
	Unaudited Consolidated Statements of Comprehensive Income (Loss) for the Three Month Periods Ended March 31, 2016 and 2015	4
	Consolidated Balance Sheets – March 31, 2016 (unaudited) and December 31, 2015	5
	Unaudited Consolidated Statements of Changes in Shareholders’ Equity for the Three Months Ended March 31, 2016 and 2015	6
	Unaudited Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2016 and 2015	7
	Notes to Unaudited Consolidated Financial Statements	8 – 16

Cautionary Statement Regarding Forward-Looking Statements		17

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17-28

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28-29

Item 4.	Controls and Procedures	29


	Part II -- OTHER INFORMATION

Item 1.	Legal Proceedings	30

Item 1A.	Risk Factors	30

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30

Item 6.	Exhibits	31

	(a) Index of Exhibits	31

Signature Page		33

	Average Price ⁽¹⁾
Quarter ended	WTI Crude (per bbl)		WCS Crude (per bbl)		Hard Coking Coal (Met Coal) (per ton ne )		Henry Hub Natural Gas (per mcf)
Second Quarter through 4/22/2016	$	39.85	$	26.01	$	84.00	$	2.00
3/31/2016		33.41		20.26		81.00		1.98
12/31/2015		42.02		27.82		89.00		2.23
9/30/2015		46.48		31.54		93.00		2.73
6/30/2015		57.64		48.09		109.50		2.73
3/31/2015		48.49		35.03		117.00		2.81
12/31/2014		73.21		57.75		119.00		3.83
9/30/2014		97.60		78.69		120.00		3.95
6/30/2014		103.06		83.78		120.00		4.58
3/31/2014		98.68		77.76		143.00		5.18
12/31/2013		97.50		66.34		152.00		3.85
9/30/2013		105.83		83.10		145.00		3.55
6/30/2013		94.05		77.48		172.00		4.02
3/31/2013		94.33		66.86		165.00		3.49

	THREE MONTHS ENDED MARCH 31,
	201 6			2015			Change
Revenues ($ in thousands)
Lodge revenue (1)	$	54,886		$	87,837		$	(32,951	)
Mobile, open camp and product revenue		10,636			29,063			(18,427	)
Total revenues	$	65,522		$	116,900		$	(51,378	)

Cost of sales and services ($ in thousands)	$	47,764		$	73,706		$	(25,942	)

Gross margin as a % of revenues		27.1	%		36.9	%		(9.8%	)

Average available lodge rooms (2)		14,602			13,221			1,381

Rentable rooms for lodges (3)		9,103			10,546			(1,443	)

Average daily rate for lodges (4)	$	111		$	135		$	(24	)

Occupancy in lodges (5)		60	%		68	%		(8%	)

Canadian dollar to U.S. dollar	$	0.728		$	0.806		$	(0.078	)

	March 31 , 201 6			December 31, 2015
Lender commitments ⁽¹⁾	$	350,000		$	375,000
Reductions in availability ⁽²⁾		(207,514	)		(121,690	)
Borrowings against revolver capacity		(74,673	)		(52,020	)
Outstanding letters of credit		(1,763	)		(5,070	)
Unused availability		66,050			196,220
Cash and cash equivalents		2,968			7,837
Total available liquidity	$	69,018		$	204,057

	Canada			Australia		U.S.			Total
Balance at December 31, 2015	$	352,185		$	--	$	49,375		$	401,560
Borrowings on revolving credit facilities		82,211			31,895		3,000			117,106
Repayments of revolving credit facilities		(96,821	)		--		(2,200	)		(99,021	)
Repayments of term loans		(4,055	)		--		(25,000	)		(29,055	)
Translation		24,374			344		--			24,718
Balance at March 31, 2016	$	357,894		$	32,239	$	25,175		$	415,308

	Credit Facility		First Amendment to the Credit Facility		Amended Credit Facility
Term loans:
U.S. term loan	$	775,000	$	50,000	$	24,375
Canadian term loan		--		325,000		325,000
Total term loans outstanding	$	775,000	$	375,000	$	349,375

Total capacity under revolving credit facilities:
U.S. revolving credit facility	$	450,000	$	50,000	$	50,000
Canadian revolving credit facility		100,000		100,000		100,000
New Canadian revolving credit facility		--		125,000		100,000
Australian revolving credit facility		100,000		100,000		100,000
Total capacity under revolving credit facilities	$	650,000	$	375,000	$	350,000

Period	Total Number of Shares Purchased			Average Price Paid per Share			Total number of shares purchased as part of publicly announced plans or programs ⁽³⁾		Maximum number of shares that may yet be purchased under the plans or programs ⁽³⁾
January 1, 2016 – January 31, 2016		--			--			--		--
February 1, 2016 – February 29, 2016		61,368	⁽¹⁾	$	0.84	⁽²⁾		--		--
March 1, 2016 - March 31, 2016		--			--			--		--
Total		61,368		$	0.84			--		--

Exhibit No.		Description

2.1	—	Agreement and Plan of Merger, dated as of April 6, 2015, among Civeo Corporation, Civeo Canadian Holdings ULC and Civeo US Merger Co (incorporated by reference to Annex A of Civeo Corporation’s definitive proxy statement/prospectus on Schedule 14A filed with the SEC on April 8, 2015).

2.2	—	Separation and Distribution Agreement, by and between Oil States International, Inc. and Civeo Corporation, dated May 27, 2014 (incorporated herein by reference to Exhibit 2.1 to the Current Report on Form 8-K (File No. 001-36246) filed on June 2, 2014).

3.1	—	Notice of Articles of Civeo Corporation (incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K12B (File No. 001-36246) filed on July 17, 2015).

3.2	—	Articles of Civeo Corporation (incorporated herein by reference to Exhibit 3.2 to the Current Report on Form 8-K12B (File No. 001-36246) filed on July 17, 2015).

4.1	—	Form of Common Share Certificate (incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K12B (File No. 001-36246) filed on July 17, 2015).

10.1	—	Second Amendment to Syndicated Facility Agreement, dated as of February 18, 2016, by and among Civeo Corporation, Civeo U.S. Holdings LLC, Civeo Management LLC, Civeo Canada Inc., Civeo Premium Camp Services Ltd., and Civeo PTY Limited as Borrowers, the Lenders named therein, Royal Bank of Canada, as Administrative Agent, U.S. Collateral Agent, Canadian Administrative Agent, Canadian Collateral Agent and an Issuing Bank and RBC Europe Limited, as Australian Administrative Agent, Australian Collateral Agent and an Issuing Bank (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-36246) filed on February 24, 2016).

10.2*†	—	Performance Share Award Program under the 2014 Equity Participation Plan.

10.3*†	—	Form of Performance Share Award Agreement under the 2014 Equity Participation Plan.

31.1*	—	Certification of Chief Executive Officer of Civeo Corporation, pursuant to Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934.

31.2*	—	Certification of Chief Financial Officer of Civeo Corporation, pursuant to Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934.

32.1**	—	Certification of Chief Executive Officer of Civeo Corporation, pursuant to Rules 13a-14(b) or 15d-14(b) under the Securities Exchange Act of 1934.

32.2**	—	Certification of Chief Financial Officer of Civeo Corporation, pursuant to Rules 13a-14(b) or 15d-14(b) under the Securities Exchange Act of 1934.

101.INS*	—	XBRL Instance 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

Date:	April 28, 2016	By	/s/ Frank C. Steininger
			Frank C. Steininger
			Senior Vice President, Chief Financial Officer and
			Treasurer (Duly Authorized Officer and Principal Financial Officer)

	CIVEO CORPORATION

	By:

Date:	Name:	Bradley Dodson

	Title:	President & Chief Executive Officer

Performance Measures			Payout
Approximate Decile	Absolute Rank	Implied Percentile Rank	Percentage
1st	1st or 2 ^nd	90%-100%	200%
2nd	3 ^rd	80%-89.9%	175%
3rd	4 ^th	70%-79.9%	150%
4th	5 ^th	60%-69.9%	125%
5th	6 ^th	50%-59.9%	100%
6th	7th or 8 ^th	40%-49.9%	75%
7th	9 ^th	30%-39.9%	50%
8 ^th	10 ^th	20%-29.9%	25%
9th-10 ^th	11th, 12th or 13 ^th	0%-19.9%	0%

Date: April 28, 2016
	/s/ Bradley J. Dodson
	Bradley J. Dodson
	President and Chief Executive Officer

Date: April 28, 2016
	/s/ Frank C. Steininger
	Frank C. Steininger
	Senior Vice President, Chief Financial Officer
	and Treasurer

	/s/ Bradley J. Dodson
	Name: Bradley J. Dodson
	Date: April 28, 2016

	/s/ Frank C. Steininger
	Name: Frank C. Steininger
	Date: April 28, 2016