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UNITED STATES
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SECURITIES AND EXCHANGE COMMISSION
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WASHINGTON, D.C. 20549
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(Mark One)
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Form 10-Q
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended March 31, 2019
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or
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from __________________________________to __________________________________
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Commission file number 001-36504
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Ireland
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98-0606750
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(State or Other Jurisdiction of Incorporation or Organization)
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(IRS Employer Identification No.)
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Weststrasse 1, 6340 Baar, Switzerland
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CH 6340
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(Address of Principal Executive Offices including Zip Code)
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(Zip Code)
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N/A
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||
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(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
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Large accelerated filer
þ
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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Emerging growth company
o
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Title of each class
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Trading Symbol
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Name of each exchange on which registered
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Ordinary shares, $0.001 par value per share
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WFT
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New York Stock Exchange
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TABLE OF CONTENTS
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PAGE
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||
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||
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Three Months Ended March 31,
|
||||||
(Dollars and shares in millions, except per share amounts)
|
2019
|
|
2018
|
||||
Revenues:
|
|
|
|
||||
Products
|
$
|
496
|
|
|
$
|
501
|
|
Services
|
850
|
|
|
922
|
|
||
Total Revenues
|
1,346
|
|
|
1,423
|
|
||
|
|
|
|
||||
Costs and Expenses:
|
|
|
|
||||
Cost of Products
|
468
|
|
|
465
|
|
||
Cost of Services
|
614
|
|
|
680
|
|
||
Research and Development
|
36
|
|
|
38
|
|
||
Selling, General and Administrative Attributable to Segments
|
199
|
|
|
200
|
|
||
Corporate General and Administrative
|
32
|
|
|
36
|
|
||
Goodwill Impairment
|
229
|
|
|
—
|
|
||
Asset Write-Downs and Other
|
49
|
|
|
18
|
|
||
Restructuring and Transformation Charges
|
20
|
|
|
25
|
|
||
Total Costs and Expenses
|
1,647
|
|
|
1,462
|
|
||
|
|
|
|
||||
Operating Loss
|
(301
|
)
|
|
(39
|
)
|
||
|
|
|
|
||||
Other Income (Expense):
|
|
|
|
||||
Interest Expense, Net
|
(155
|
)
|
|
(149
|
)
|
||
Warrant Fair Value Adjustment
|
—
|
|
|
46
|
|
||
Bond Tender and Call Premium
|
—
|
|
|
(34
|
)
|
||
Currency Devaluation Charges
|
—
|
|
|
(26
|
)
|
||
Other Expense, Net
|
(9
|
)
|
|
(8
|
)
|
||
|
|
|
|
||||
Loss Before Income Taxes
|
(465
|
)
|
|
(210
|
)
|
||
Income Tax Provision
|
(12
|
)
|
|
(32
|
)
|
||
Net Loss
|
(477
|
)
|
|
(242
|
)
|
||
Net Income Attributable to Noncontrolling Interests
|
4
|
|
|
3
|
|
||
Net Loss Attributable to Weatherford
|
$
|
(481
|
)
|
|
$
|
(245
|
)
|
|
|
|
|
||||
Loss Per Share Attributable to Weatherford:
|
|
|
|
||||
Basic & Diluted
|
$
|
(0.48
|
)
|
|
$
|
(0.25
|
)
|
|
|
|
|
||||
Weighted Average Shares Outstanding:
|
|
|
|
||||
Basic & Diluted
|
1,003
|
|
|
994
|
|
|
Three Months Ended March 31,
|
||||||
(Dollars in millions)
|
2019
|
|
2018
|
||||
Net Loss
|
$
|
(477
|
)
|
|
$
|
(242
|
)
|
|
|
|
|
||||
Currency Translation Adjustments
|
33
|
|
|
5
|
|
||
Other Comprehensive Income
|
33
|
|
|
5
|
|
||
Comprehensive Loss
|
(444
|
)
|
|
(237
|
)
|
||
Comprehensive Income Attributable to Noncontrolling Interests
|
4
|
|
|
3
|
|
||
Comprehensive Loss Attributable to Weatherford
|
$
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(448
|
)
|
|
$
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(240
|
)
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March 31,
|
|
December 31,
|
||||
(Dollars and shares in millions, except par value)
|
2019
|
|
2018
|
||||
|
(Unaudited)
|
|
|
||||
Current Assets:
|
|
|
|
||||
Cash and Cash Equivalents
|
$
|
598
|
|
|
$
|
602
|
|
Accounts Receivable, Net of Allowance for Uncollectible Accounts of $124 at March 31, 2019 and $123 at December 31, 2018
|
1,154
|
|
|
1,130
|
|
||
Inventories, Net
|
1,050
|
|
|
1,025
|
|
||
Other Current Assets
|
434
|
|
|
428
|
|
||
Assets Held for Sale
|
170
|
|
|
265
|
|
||
Total Current Assets
|
3,406
|
|
|
3,450
|
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||
|
|
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|
||||
Property, Plant and Equipment, Net of Accumulated Depreciation of $5,784 at March 31, 2019 and $5,786 at December 31, 2018
|
1,994
|
|
|
2,086
|
|
||
Goodwill
|
504
|
|
|
713
|
|
||
Other Non-Current Assets
|
615
|
|
|
352
|
|
||
Total Assets
|
$
|
6,519
|
|
|
$
|
6,601
|
|
|
|
|
|
||||
Current Liabilities:
|
|
|
|
||||
Short-term Borrowings and Current Portion of Long-term Debt
|
$
|
612
|
|
|
$
|
383
|
|
Accounts Payable
|
746
|
|
|
732
|
|
||
Accrued Salaries and Benefits
|
236
|
|
|
249
|
|
||
Income Taxes Payable
|
198
|
|
|
214
|
|
||
Other Current Liabilities
|
712
|
|
|
722
|
|
||
Total Current Liabilities
|
2,504
|
|
|
2,300
|
|
||
|
|
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|
||||
Long-term Debt
|
7,606
|
|
|
7,605
|
|
||
Other Non-Current Liabilities
|
515
|
|
|
362
|
|
||
Total Liabilities
|
10,625
|
|
|
10,267
|
|
||
|
|
|
|
||||
Shareholders’ Deficiency:
|
|
|
|
||||
Shares - Par Value $0.001; Authorized 1,356 shares, Issued and Outstanding 1,003 shares at March 31, 2019 and 1,002 shares at December 31, 2018
|
$
|
1
|
|
|
$
|
1
|
|
Capital in Excess of Par Value
|
6,719
|
|
|
6,711
|
|
||
Retained Deficit
|
(9,152
|
)
|
|
(8,671
|
)
|
||
Accumulated Other Comprehensive Loss
|
(1,713
|
)
|
|
(1,746
|
)
|
||
Weatherford Shareholders’ Deficiency
|
(4,145
|
)
|
|
(3,705
|
)
|
||
Noncontrolling Interests
|
39
|
|
|
39
|
|
||
Total Shareholders’ Deficiency
|
(4,106
|
)
|
|
(3,666
|
)
|
||
Total Liabilities and Shareholders’ Deficiency
|
$
|
6,519
|
|
|
$
|
6,601
|
|
|
Three Months Ended March 31,
|
||||||
(Dollars in millions)
|
2019
|
|
2018
|
||||
Cash Flows From Operating Activities:
|
|
|
|
||||
Net Loss
|
$
|
(477
|
)
|
|
$
|
(242
|
)
|
Adjustments to Reconcile Net Loss to Net Cash From Operating Activities:
|
|
|
|
||||
Depreciation and Amortization
|
123
|
|
|
147
|
|
||
Goodwill Impairment
|
229
|
|
|
—
|
|
||
Employee Share-Based Compensation Expense
|
8
|
|
|
13
|
|
||
Inventory Write-off and Other Related Charges
|
12
|
|
|
29
|
|
||
Asset Write-Downs and Other Charges
|
19
|
|
|
29
|
|
||
Loss on Sale of Assets and Businesses, Net
|
36
|
|
|
—
|
|
||
Bond Tender and Call Premium
|
—
|
|
|
34
|
|
||
Currency Devaluation Charges
|
—
|
|
|
26
|
|
||
Warrant Fair Value Adjustment
|
—
|
|
|
(46
|
)
|
||
Other, Net
|
(12
|
)
|
|
7
|
|
||
Change in Operating Assets and Liabilities, Net of Effect of Businesses Acquired:
|
|
|
|
||||
Accounts Receivable
|
(18
|
)
|
|
23
|
|
||
Inventories
|
(40
|
)
|
|
(13
|
)
|
||
Other Current Assets
|
(25
|
)
|
|
(7
|
)
|
||
Accounts Payable
|
11
|
|
|
(55
|
)
|
||
Accrued Litigation and Settlements
|
(3
|
)
|
|
(8
|
)
|
||
Other Current Liabilities
|
(106
|
)
|
|
(56
|
)
|
||
Other, Net
|
(6
|
)
|
|
(66
|
)
|
||
Net Cash Used in Operating Activities
|
(249
|
)
|
|
(185
|
)
|
||
|
|
|
|
||||
Cash Flows From Investing Activities:
|
|
|
|
||||
Capital Expenditures for Property, Plant and Equipment
|
(58
|
)
|
|
(29
|
)
|
||
Capital Expenditures for and Acquisition of Assets Held for Sale
|
(1
|
)
|
|
(9
|
)
|
||
Acquisitions of Businesses, Net of Cash Acquired
|
—
|
|
|
4
|
|
||
Acquisition of Intellectual Property
|
(5
|
)
|
|
(3
|
)
|
||
Proceeds from Sale of Assets
|
26
|
|
|
12
|
|
||
Proceeds from Sale of Businesses, Net
|
74
|
|
|
25
|
|
||
Net Cash Provided by Investing Activities
|
36
|
|
|
—
|
|
||
|
|
|
|
||||
Cash Flows From Financing Activities:
|
|
|
|
||||
Borrowings of Long-term Debt
|
—
|
|
|
588
|
|
||
Repayments of Long-term Debt
|
(15
|
)
|
|
(440
|
)
|
||
Borrowings (Repayments) of Short-term Debt, Net
|
228
|
|
|
(54
|
)
|
||
Bond Tender Premium
|
—
|
|
|
(30
|
)
|
||
Other Financing Activities
|
(5
|
)
|
|
(10
|
)
|
||
Net Cash Provided by Financing Activities
|
208
|
|
|
54
|
|
||
Effect of Exchange Rate Changes on Cash and Cash Equivalents
|
1
|
|
|
(23
|
)
|
||
|
|
|
|
||||
Net Decrease in Cash and Cash Equivalents
|
(4
|
)
|
|
(154
|
)
|
||
Cash and Cash Equivalents at Beginning of Period
|
602
|
|
|
613
|
|
||
Cash and Cash Equivalents at End of Period
|
$
|
598
|
|
|
$
|
459
|
|
|
|
|
|
||||
Supplemental Cash Flow Information:
|
|
|
|
||||
Interest Paid
|
$
|
157
|
|
|
$
|
174
|
|
Income Taxes Paid, Net of Refunds
|
$
|
35
|
|
|
$
|
47
|
|
(Dollars in millions)
|
Balance at January 1, 2019
|
||
Assets and Liabilities:
|
|
||
Other Non-Current Assets
|
$
|
288
|
|
Other Current Liabilities
|
92
|
|
|
Other Non-Current Liabilities
|
219
|
|
(Dollars in millions)
|
March 31, 2019
|
|
December 31, 2018
|
||||
Raw materials, components and supplies
|
$
|
141
|
|
|
$
|
131
|
|
Work in process
|
57
|
|
|
47
|
|
||
Finished goods
|
852
|
|
|
847
|
|
||
|
$
|
1,050
|
|
|
$
|
1,025
|
|
(Dollars in millions)
|
Western Hemisphere
|
|
Eastern Hemisphere
|
|
Total
|
||||||
Balance at December 31, 2018
|
$
|
494
|
|
|
$
|
219
|
|
|
$
|
713
|
|
Impairment
|
(229
|
)
|
|
—
|
|
|
(229
|
)
|
|||
Reclassification from held for sale
|
4
|
|
|
—
|
|
|
4
|
|
|||
Foreign currency translation adjustments
|
12
|
|
|
4
|
|
|
16
|
|
|||
Balance at March 31, 2019
|
$
|
281
|
|
|
$
|
223
|
|
|
$
|
504
|
|
|
Three Months Ended March 31, 2019
|
||||||||
|
|
|
Total
|
||||||
(Dollars in millions)
|
Severance
|
Other
|
Severance and
|
||||||
Transformation Plan
|
Charges
|
Charges
|
Other Charges
|
||||||
Western Hemisphere
|
$
|
1
|
|
$
|
4
|
|
$
|
5
|
|
Eastern Hemisphere
|
1
|
|
4
|
|
5
|
|
|||
Corporate
|
—
|
|
10
|
|
10
|
|
|||
Total
|
$
|
2
|
|
$
|
18
|
|
$
|
20
|
|
|
Three Months Ended March 31, 2018
|
||||||||
|
|
|
Total
|
||||||
(Dollars in millions)
|
Severance
|
Other
|
Severance and
|
||||||
2016-17 Plan
|
Charges
|
Charges
|
Other Charges
|
||||||
Western Hemisphere
|
$
|
4
|
|
$
|
—
|
|
$
|
4
|
|
Eastern Hemisphere
|
4
|
|
5
|
|
9
|
|
|||
Corporate
|
3
|
|
9
|
|
12
|
|
|||
Total
|
$
|
11
|
|
$
|
14
|
|
$
|
25
|
|
|
At March 31, 2019
|
|||||||||||||||
|
Transformation Plan
|
|
2016-17 and 2016 Plans
|
Total
|
||||||||||||
|
|
|
|
|
|
Severance
|
||||||||||
|
Severance
|
Other
|
|
Severance
|
Other
|
and Other
|
||||||||||
(Dollars in millions)
|
Liability
|
Liability
|
|
Liability
|
Liability
|
Liability
|
||||||||||
Western Hemisphere
|
$
|
4
|
|
$
|
1
|
|
|
$
|
2
|
|
$
|
2
|
|
$
|
9
|
|
Eastern Hemisphere
|
6
|
|
—
|
|
|
1
|
|
2
|
|
9
|
|
|||||
Corporate
|
—
|
|
6
|
|
|
3
|
|
—
|
|
9
|
|
|||||
Total
|
$
|
10
|
|
$
|
7
|
|
|
$
|
6
|
|
$
|
4
|
|
$
|
27
|
|
|
|
|
Three Months Ended March 31, 2019
|
|
|
||||||||||||||
(Dollars in millions)
|
Accrued Balance at December 31, 2018
|
|
Charges
|
|
Cash Payments
|
|
Other
|
|
Accrued Balance at March 31, 2019
|
||||||||||
Transformation Plan
|
|
|
|
|
|
|
|
|
|
||||||||||
Severance liability
|
$
|
18
|
|
|
$
|
2
|
|
|
$
|
(10
|
)
|
|
$
|
—
|
|
|
$
|
10
|
|
Other restructuring liability
|
16
|
|
|
$
|
14
|
|
|
$
|
(22
|
)
|
|
$
|
(1
|
)
|
|
$
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2016-17 and Prior Plans
|
|
|
|
|
|
|
|
|
|
||||||||||
Severance liability
|
6
|
|
|
—
|
|
|
(1
|
)
|
|
1
|
|
|
6
|
|
|||||
Other restructuring liability
|
19
|
|
|
—
|
|
|
(1
|
)
|
|
(14
|
)
|
|
4
|
|
|||||
Total severance and other restructuring liability
|
$
|
59
|
|
|
$
|
16
|
|
|
$
|
(34
|
)
|
|
$
|
(14
|
)
|
|
$
|
27
|
|
(Dollars in millions)
|
Classification
|
|
March 31, 2019
|
|
|
Balance Sheet Components:
|
|
|
|
||
Assets
|
|
|
|
||
Operating
|
Other Non-Current Assets
|
|
$
|
281
|
|
Finance
|
Property Plant and Equipment, Net
|
|
57
|
|
|
Total leased assets
|
|
|
$
|
338
|
|
|
|
|
|
||
Liabilities
|
|
|
|
||
Current
|
|
|
|
||
Operating
|
Other Current Liabilities
|
|
$
|
90
|
|
Finance
|
Short-term Borrowings and Current Portion of Long-term Debt
|
|
7
|
|
|
|
|
|
|
||
Non-Current
|
|
|
|
||
Operating
|
Other Non-Current Liabilities
|
|
212
|
|
|
Finance
|
Long-term Debt
|
|
66
|
|
|
Total lease liabilities
|
|
|
$
|
375
|
|
(Dollars in millions)
|
|
Three Months Ended March 31, 2019
|
||
Lease Expense Components:
|
|
|
||
Operating lease expense
|
|
$
|
30
|
|
Short-term and variable lease expense
|
|
20
|
|
|
Finance lease expense: Amortization of ROU assets and interest on lease liabilities
|
|
3
|
|
|
Sublease income
|
|
(2
|
)
|
|
Total lease expense
|
|
$
|
51
|
|
|
|
Operating
|
Finance
|
||||
(Dollars in millions)
|
|
Leases
|
Leases
|
||||
Maturity of Lease Liabilities as of March 31, 2019:
|
|
|
|
||||
2019
|
|
$
|
98
|
|
$
|
8
|
|
2020
|
|
87
|
|
11
|
|
||
2021
|
|
68
|
|
11
|
|
||
2022
|
|
44
|
|
11
|
|
||
2023
|
|
27
|
|
11
|
|
||
After 2023
|
|
172
|
|
38
|
|
||
Total Lease Payments
|
|
496
|
|
90
|
|
||
Less: Interest
|
|
194
|
|
17
|
|
||
Present Value of Lease Liabilities
|
|
$
|
302
|
|
$
|
73
|
|
(Dollars in millions except years and percentages)
|
|
Three Months Ended March 31, 2019
|
||
Other Supplemental Information:
|
|
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
||
Operating cash outflows from operating leases
|
|
$
|
32
|
|
Operating cash outflows from finance leases
|
|
$
|
1
|
|
Financing cash outflows from finance leases
|
|
$
|
2
|
|
|
|
|
||
ROU assets obtained in exchange of new operating lease liabilities
|
|
$
|
19
|
|
Losses on sale and leaseback transactions (short-term)
|
|
$
|
36
|
|
|
|
|
||
Weighted-average remaining lease term (years)
|
|
|
||
Operating leases
|
|
6.7
|
|
|
Finance leases
|
|
7.9
|
|
|
|
|
|
||
Weighted-average discount rate (percentages)
|
|
|
||
Operating leases
|
|
13.1
|
%
|
|
Finance leases
|
|
5.6
|
%
|
(Dollars in millions)
|
March 31, 2019
|
|
December 31, 2018
|
||||
364-Day Credit Agreement
|
$
|
317
|
|
|
$
|
317
|
|
A&R Credit Agreement
|
230
|
|
|
—
|
|
||
Other Short-term Loans
|
7
|
|
|
9
|
|
||
Current Portion of Long-term Debt
|
58
|
|
|
57
|
|
||
Short-term Borrowings and Current Portion of Long-term Debt
|
$
|
612
|
|
|
$
|
383
|
|
(Dollars in millions)
|
March 31, 2019
|
||
Facilities
|
$
|
1,144
|
|
Less uses of facilities:
|
|
||
364-Day Credit Agreement
|
317
|
|
|
A&R Credit Agreement
|
230
|
|
|
Letters of Credit
|
206
|
|
|
Term Loan Agreement Principal Borrowing
|
298
|
|
|
Borrowing Availability
|
$
|
93
|
|
(Dollars in millions)
|
March 31, 2019
|
|
December 31, 2018
|
||||
Fair Value
|
$
|
5,310
|
|
|
$
|
4,455
|
|
Carrying Value
|
7,295
|
|
|
7,285
|
|
(Dollars in millions)
|
Par Value of Issued Shares
|
|
Capital in Excess of Par Value
|
|
Retained Deficit
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Non-controlling Interests
|
|
Total Shareholders’ Deficiency
|
||||||||||||
Balance at December 31, 2017
|
$
|
1
|
|
|
$
|
6,655
|
|
|
$
|
(5,763
|
)
|
|
$
|
(1,519
|
)
|
|
$
|
55
|
|
|
$
|
(571
|
)
|
Net Income (Loss)
|
—
|
|
|
—
|
|
|
(245
|
)
|
|
—
|
|
|
3
|
|
|
(242
|
)
|
||||||
Other Comprehensive Income
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
||||||
Dividends Paid to Noncontrolling Interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
||||||
Equity Awards Granted, Vested and Exercised
|
—
|
|
|
17
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17
|
|
||||||
Adoption of Intra-Entity Transfers of Assets Other Than Inventory and Revenue from Contracts with Customers
|
—
|
|
|
—
|
|
|
(97
|
)
|
|
—
|
|
|
—
|
|
|
(97
|
)
|
||||||
Other
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
(6
|
)
|
||||||
Balance at March 31, 2018
|
$
|
1
|
|
|
$
|
6,676
|
|
|
$
|
(6,105
|
)
|
|
$
|
(1,514
|
)
|
|
$
|
44
|
|
|
$
|
(898
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at December 31, 2018
|
$
|
1
|
|
|
$
|
6,711
|
|
|
$
|
(8,671
|
)
|
|
$
|
(1,746
|
)
|
|
$
|
39
|
|
|
$
|
(3,666
|
)
|
Net Income (Loss)
|
—
|
|
|
—
|
|
|
(481
|
)
|
|
—
|
|
|
4
|
|
|
(477
|
)
|
||||||
Other Comprehensive Income
|
—
|
|
|
—
|
|
|
—
|
|
|
33
|
|
|
—
|
|
|
33
|
|
||||||
Dividends Paid to Noncontrolling Interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
(5
|
)
|
||||||
Equity Awards Granted, Vested and Exercised
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||||
Balance at March 31, 2019
|
$
|
1
|
|
|
$
|
6,719
|
|
|
$
|
(9,152
|
)
|
|
$
|
(1,713
|
)
|
|
$
|
39
|
|
|
$
|
(4,106
|
)
|
(Dollars in millions)
|
Currency Translation Adjustment
|
|
Defined Benefit Pension
|
|
Deferred Loss on Derivatives
|
|
Total
|
||||||||
Balance at December 31, 2017
|
$
|
(1,484
|
)
|
|
$
|
(26
|
)
|
|
$
|
(9
|
)
|
|
$
|
(1,519
|
)
|
|
|
|
|
|
|
|
|
||||||||
Other Comprehensive Income before Reclassifications
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
||||
Net activity
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Balance at March 31, 2018
|
$
|
(1,479
|
)
|
|
$
|
(26
|
)
|
|
$
|
(9
|
)
|
|
$
|
(1,514
|
)
|
|
|
|
|
|
|
|
|
||||||||
Balance at December 31, 2018
|
$
|
(1,724
|
)
|
|
$
|
(14
|
)
|
|
$
|
(8
|
)
|
|
$
|
(1,746
|
)
|
|
|
|
|
|
|
|
|
||||||||
Other Comprehensive Income before Reclassifications
|
33
|
|
|
—
|
|
|
—
|
|
|
33
|
|
||||
Net activity
|
33
|
|
|
—
|
|
|
—
|
|
|
33
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Balance at March 31, 2019
|
$
|
(1,691
|
)
|
|
$
|
(14
|
)
|
|
$
|
(8
|
)
|
|
$
|
(1,713
|
)
|
|
Three Months Ended March 31,
|
||||||
(Dollars in millions)
|
2019
|
|
2018
|
||||
Share-based compensation
|
$
|
8
|
|
|
$
|
13
|
|
Related tax benefit
|
—
|
|
|
—
|
|
|
Three Months Ended March 31,
|
||||
(Shares in millions)
|
2019
|
|
2018
|
||
Basic and Diluted weighted average shares outstanding
|
1,003
|
|
|
994
|
|
|
Three Months Ended March 31,
|
||||
(Shares in millions)
|
2019
|
|
2018
|
||
Anti-dilutive potential shares due to net loss
|
250
|
|
|
250
|
|
|
Three Months Ended March 31, 2019
|
||||||||||
(Dollars in millions)
|
Western Hemisphere
|
|
Eastern Hemisphere
|
|
Total Revenues Excluding Rental Revenues
|
||||||
Product Lines:
|
|
|
|
|
|
||||||
Production
|
$
|
295
|
|
|
$
|
96
|
|
|
$
|
391
|
|
Completions
|
133
|
|
|
172
|
|
|
305
|
|
|||
Drilling and Evaluation
|
142
|
|
|
184
|
|
|
326
|
|
|||
Well Construction
|
99
|
|
|
147
|
|
|
246
|
|
|||
Total
|
$
|
669
|
|
|
$
|
599
|
|
|
$
|
1,268
|
|
|
Three Months Ended March 31, 2018
|
||||||||||
(Dollars in millions)
|
Western Hemisphere
|
|
Eastern Hemisphere
|
|
Total Revenues Excluding Rental Revenues
|
||||||
Product Lines:
|
|
|
|
|
|
||||||
Production
|
$
|
286
|
|
|
$
|
95
|
|
|
$
|
381
|
|
Completions
|
157
|
|
|
136
|
|
|
293
|
|
|||
Drilling and Evaluation
|
156
|
|
|
194
|
|
|
350
|
|
|||
Well Construction
|
101
|
|
|
216
|
|
|
317
|
|
|||
Total
|
$
|
700
|
|
|
$
|
641
|
|
|
$
|
1,341
|
|
|
Three Months Ended March 31,
|
|||||
(Dollars in millions)
|
2019
|
2018
|
||||
Geographic Areas:
|
|
|
||||
United States
|
$
|
329
|
|
$
|
345
|
|
Latin America
|
258
|
|
226
|
|
||
Canada
|
82
|
|
129
|
|
||
Western Hemisphere
|
669
|
|
700
|
|
||
|
|
|
||||
Middle East & North Africa
|
308
|
|
362
|
|
||
Europe/Sub-Sahara Africa/Russia
|
216
|
|
214
|
|
||
Asia
|
75
|
|
65
|
|
||
Eastern Hemisphere
|
599
|
|
641
|
|
||
|
|
|
||||
Total Product and Service Revenue before Rental Revenues
|
1,268
|
|
1,341
|
|
||
Equipment Rental Revenues
|
78
|
|
82
|
|
||
Total Revenues
|
$
|
1,346
|
|
$
|
1,423
|
|
(Dollars in millions)
|
March 31, 2019
|
December 31, 2018
|
||||
Receivables for Product and Services in Accounts Receivable, Net
|
$
|
1,067
|
|
$
|
1,051
|
|
(Dollars in millions)
|
Contract Assets
|
Contract Liabilities
|
||||
Balance at December 31, 2018
|
$
|
4
|
|
$
|
64
|
|
Revenue recognized that was included in the deferred revenue balance at the beginning of the period
|
—
|
|
(83
|
)
|
||
Increase due to cash received, excluding amount recognized as revenue during the period
|
—
|
|
75
|
|
||
Increase due to revenue recognized during the period but contingent on future performance
|
10
|
|
—
|
|
||
Transferred to receivables from contract assets recognized at the beginning of the period
|
(2
|
)
|
—
|
|
||
Changes as a result of adjustments due to changes in estimates or contract modifications
|
—
|
|
3
|
|
||
Balance at March 31, 2019
|
$
|
12
|
|
$
|
59
|
|
(Dollars in millions)
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
Thereafter
|
|
Total
|
|
||||||
Service Revenue
|
$
|
57
|
|
$
|
33
|
|
$
|
18
|
|
$
|
18
|
|
$
|
19
|
|
$
|
145
|
|
|
Three Months Ended March 31, 2019
|
||||||||||
(Dollars in millions)
|
Revenues
|
|
Income (Loss)
from
Operations
|
|
Depreciation
and
Amortization
|
||||||
Western Hemisphere
|
$
|
726
|
|
|
$
|
9
|
|
|
$
|
48
|
|
Eastern Hemisphere
|
620
|
|
|
20
|
|
|
72
|
|
|||
|
1,346
|
|
|
29
|
|
|
120
|
|
|||
Corporate General and Administrative
|
|
|
(32
|
)
|
|
3
|
|
||||
Goodwill Impairment
|
|
|
(229
|
)
|
|
|
|||||
Restructuring and Transformation Charges
|
|
|
(20
|
)
|
|
|
|||||
Asset Write-Downs and Other
(a)
|
|
|
(49
|
)
|
|
|
|||||
Total
|
$
|
1,346
|
|
|
$
|
(301
|
)
|
|
$
|
123
|
|
(a)
|
Includes the loss on disposition of assets and businesses, other fees and asset write-downs, partially offset by a reduction of a contingency reserve on a legacy contract.
|
|
Three Months Ended March 31, 2018
|
||||||||||
(Dollars in millions)
|
Revenues
|
|
Income (Loss)
from
Operations
|
|
Depreciation
and
Amortization
|
||||||
Western Hemisphere
|
$
|
756
|
|
|
$
|
24
|
|
|
$
|
60
|
|
Eastern Hemisphere
|
667
|
|
|
16
|
|
|
86
|
|
|||
|
1,423
|
|
|
40
|
|
|
146
|
|
|||
Corporate General and Administrative
|
|
|
(36
|
)
|
|
1
|
|
||||
Restructuring and Transformation Charges
|
|
|
(25
|
)
|
|
|
|||||
Asset Write-Downs and Other
(b)
|
|
|
(18
|
)
|
|
|
|||||
Total
|
$
|
1,423
|
|
|
$
|
(39
|
)
|
|
$
|
147
|
|
(b)
|
Includes asset write-downs and inventory charges, partially offset by a gain on purchase of a joint venture remaining interest.
|
(Dollars in millions)
|
Weatherford
Ireland
|
|
Weatherford Bermuda
|
|
Weatherford Delaware
|
|
Other
Subsidiaries
|
|
Eliminations
|
|
Consolidation
|
||||||||||||
Revenues
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,346
|
|
|
$
|
—
|
|
|
$
|
1,346
|
|
Costs and Expenses
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
(1,638
|
)
|
|
—
|
|
|
(1,647
|
)
|
||||||
Operating Income (Loss)
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
(292
|
)
|
|
—
|
|
|
(301
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest Expense, Net
|
—
|
|
|
(143
|
)
|
|
(25
|
)
|
|
7
|
|
|
6
|
|
|
(155
|
)
|
||||||
Intercompany Charges, Net
|
—
|
|
|
1
|
|
|
(4
|
)
|
|
(42
|
)
|
|
45
|
|
|
—
|
|
||||||
Equity in Subsidiary Income (Loss)
|
(472
|
)
|
|
(161
|
)
|
|
(186
|
)
|
|
—
|
|
|
819
|
|
|
—
|
|
||||||
Other, Net
|
—
|
|
|
4
|
|
|
(1
|
)
|
|
(12
|
)
|
|
—
|
|
|
(9
|
)
|
||||||
Income (Loss) Before Income Taxes
|
(481
|
)
|
|
(299
|
)
|
|
(216
|
)
|
|
(339
|
)
|
|
870
|
|
|
(465
|
)
|
||||||
(Provision) Benefit for Income Taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
|
(12
|
)
|
||||||
Net Income (Loss)
|
(481
|
)
|
|
(299
|
)
|
|
(216
|
)
|
|
(351
|
)
|
|
870
|
|
|
(477
|
)
|
||||||
Noncontrolling Interests
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
||||||
Net Income (Loss) Attributable to Weatherford
|
$
|
(481
|
)
|
|
$
|
(299
|
)
|
|
$
|
(216
|
)
|
|
$
|
(355
|
)
|
|
$
|
870
|
|
|
$
|
(481
|
)
|
Comprehensive Income (Loss) Attributable to Weatherford
|
$
|
(448
|
)
|
|
$
|
(305
|
)
|
|
$
|
(218
|
)
|
|
$
|
(322
|
)
|
|
$
|
845
|
|
|
$
|
(448
|
)
|
(Dollars in millions)
|
Weatherford
Ireland
|
|
Weatherford
Bermuda
|
|
Weatherford
Delaware
|
|
Other
Subsidiaries
|
|
Eliminations
|
|
Consolidation
|
||||||||||||
Revenues
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,423
|
|
|
$
|
—
|
|
|
$
|
1,423
|
|
Costs and Expenses
|
2
|
|
|
—
|
|
|
—
|
|
|
(1,464
|
)
|
|
—
|
|
|
(1,462
|
)
|
||||||
Operating Income (Loss)
|
2
|
|
|
—
|
|
|
—
|
|
|
(41
|
)
|
|
—
|
|
|
(39
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest Expense, Net
|
—
|
|
|
(144
|
)
|
|
(14
|
)
|
|
4
|
|
|
5
|
|
|
(149
|
)
|
||||||
Intercompany Charges, Net
|
(18
|
)
|
|
(3
|
)
|
|
11
|
|
|
(594
|
)
|
|
604
|
|
|
—
|
|
||||||
Equity in Subsidiary Income
|
(275
|
)
|
|
(350
|
)
|
|
(133
|
)
|
|
—
|
|
|
758
|
|
|
—
|
|
||||||
Other, Net
|
46
|
|
|
90
|
|
|
122
|
|
|
(157
|
)
|
|
(123
|
)
|
|
(22
|
)
|
||||||
Income (Loss) Before Income Taxes
|
(245
|
)
|
|
(407
|
)
|
|
(14
|
)
|
|
(788
|
)
|
|
1,244
|
|
|
(210
|
)
|
||||||
(Provision) Benefit for Income Taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
(32
|
)
|
|
—
|
|
|
(32
|
)
|
||||||
Net Income (Loss)
|
(245
|
)
|
|
(407
|
)
|
|
(14
|
)
|
|
(820
|
)
|
|
1,244
|
|
|
(242
|
)
|
||||||
Noncontrolling Interests
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
||||||
Net Income (Loss) Attributable to Weatherford
|
$
|
(245
|
)
|
|
$
|
(407
|
)
|
|
$
|
(14
|
)
|
|
$
|
(823
|
)
|
|
$
|
1,244
|
|
|
$
|
(245
|
)
|
Comprehensive Income (Loss) Attributable to Weatherford
|
$
|
(240
|
)
|
|
$
|
(401
|
)
|
|
$
|
(2
|
)
|
|
$
|
(818
|
)
|
|
$
|
1,221
|
|
|
$
|
(240
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in millions)
|
Weatherford
Ireland
|
|
Weatherford
Bermuda
|
|
Weatherford
Delaware
|
|
Other
Subsidiaries
|
|
Eliminations
|
|
Consolidation
|
||||||||||||
Current Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and Cash Equivalents
|
$
|
—
|
|
|
$
|
244
|
|
|
$
|
—
|
|
|
$
|
354
|
|
|
$
|
—
|
|
|
$
|
598
|
|
Other Current Assets
|
4
|
|
|
—
|
|
|
485
|
|
|
2,842
|
|
|
(523
|
)
|
|
2,808
|
|
||||||
Total Current Assets
|
4
|
|
|
244
|
|
|
485
|
|
|
3,196
|
|
|
(523
|
)
|
|
3,406
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity Investments in Affiliates
|
(4,126
|
)
|
|
7,370
|
|
|
6,907
|
|
|
407
|
|
|
(10,558
|
)
|
|
—
|
|
||||||
Intercompany Receivables, Net
|
—
|
|
|
204
|
|
|
—
|
|
|
2,875
|
|
|
(3,079
|
)
|
|
—
|
|
||||||
Other Assets
|
—
|
|
|
11
|
|
|
135
|
|
|
2,967
|
|
|
—
|
|
|
3,113
|
|
||||||
Total Assets
|
$
|
(4,122
|
)
|
|
$
|
7,829
|
|
|
$
|
7,527
|
|
|
$
|
9,445
|
|
|
$
|
(14,160
|
)
|
|
$
|
6,519
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Short-term Borrowings and Current Portion of Long-Term Debt
|
$
|
—
|
|
|
$
|
599
|
|
|
$
|
—
|
|
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
612
|
|
Accounts Payable and Other Current Liabilities
|
13
|
|
|
140
|
|
|
—
|
|
|
2,262
|
|
|
(523
|
)
|
|
1,892
|
|
||||||
Total Current Liabilities
|
13
|
|
|
739
|
|
|
—
|
|
|
2,275
|
|
|
(523
|
)
|
|
2,504
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Long-term Debt
|
—
|
|
|
6,634
|
|
|
782
|
|
|
128
|
|
|
62
|
|
|
7,606
|
|
||||||
Intercompany Payables, Net
|
10
|
|
|
—
|
|
|
3,069
|
|
|
—
|
|
|
(3,079
|
)
|
|
—
|
|
||||||
Other Long-term Liabilities
|
—
|
|
|
7
|
|
|
—
|
|
|
516
|
|
|
(8
|
)
|
|
515
|
|
||||||
Total Liabilities
|
23
|
|
|
7,380
|
|
|
3,851
|
|
|
2,919
|
|
|
(3,548
|
)
|
|
10,625
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Weatherford Shareholders’ (Deficiency) Equity
|
(4,145
|
)
|
|
449
|
|
|
3,676
|
|
|
6,487
|
|
|
(10,612
|
)
|
|
(4,145
|
)
|
||||||
Noncontrolling Interests
|
—
|
|
|
—
|
|
|
—
|
|
|
39
|
|
|
—
|
|
|
39
|
|
||||||
Total Liabilities and Shareholders’ (Deficiency) Equity
|
$
|
(4,122
|
)
|
|
$
|
7,829
|
|
|
$
|
7,527
|
|
|
$
|
9,445
|
|
|
$
|
(14,160
|
)
|
|
$
|
6,519
|
|
(Dollars in millions)
|
Weatherford
Ireland
|
|
Weatherford
Bermuda
|
|
Weatherford
Delaware
|
|
Other
Subsidiaries
|
|
Eliminations
|
|
Consolidation
|
||||||||||||
Current Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and Cash Equivalents
|
$
|
—
|
|
|
$
|
284
|
|
|
$
|
—
|
|
|
$
|
318
|
|
|
$
|
—
|
|
|
$
|
602
|
|
Other Current Assets
|
1
|
|
|
—
|
|
|
654
|
|
|
2,887
|
|
|
(694
|
)
|
|
2,848
|
|
||||||
Total Current Assets
|
1
|
|
|
284
|
|
|
654
|
|
|
3,205
|
|
|
(694
|
)
|
|
3,450
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity Investments in Affiliates
|
(3,694
|
)
|
|
7,531
|
|
|
7,203
|
|
|
354
|
|
|
(11,394
|
)
|
|
—
|
|
||||||
Intercompany Receivables, Net
|
—
|
|
|
103
|
|
|
—
|
|
|
2,966
|
|
|
(3,069
|
)
|
|
—
|
|
||||||
Other Assets
|
—
|
|
|
15
|
|
|
4
|
|
|
3,132
|
|
|
—
|
|
|
3,151
|
|
||||||
Total Assets
|
$
|
(3,693
|
)
|
|
$
|
7,933
|
|
|
$
|
7,861
|
|
|
$
|
9,657
|
|
|
$
|
(15,157
|
)
|
|
$
|
6,601
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Short-term Borrowings and Current Portion of Long-Term Debt
|
$
|
—
|
|
|
$
|
373
|
|
|
$
|
—
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
383
|
|
Accounts Payable and Other Current Liabilities
|
9
|
|
|
174
|
|
|
—
|
|
|
2,428
|
|
|
(694
|
)
|
|
1,917
|
|
||||||
Total Current Liabilities
|
9
|
|
|
547
|
|
|
—
|
|
|
2,438
|
|
|
(694
|
)
|
|
2,300
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Long-term Debt
|
—
|
|
|
6,632
|
|
|
775
|
|
|
130
|
|
|
68
|
|
|
7,605
|
|
||||||
Intercompany Payables, Net
|
3
|
|
|
—
|
|
|
3,066
|
|
|
—
|
|
|
(3,069
|
)
|
|
—
|
|
||||||
Other Long-term Liabilities
|
—
|
|
|
7
|
|
|
—
|
|
|
362
|
|
|
(7
|
)
|
|
362
|
|
||||||
Total Liabilities
|
12
|
|
|
7,186
|
|
|
3,841
|
|
|
2,930
|
|
|
(3,702
|
)
|
|
10,267
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Weatherford Shareholders’ (Deficiency) Equity
|
(3,705
|
)
|
|
747
|
|
|
4,020
|
|
|
6,688
|
|
|
(11,455
|
)
|
|
(3,705
|
)
|
||||||
Noncontrolling Interests
|
—
|
|
|
—
|
|
|
—
|
|
|
39
|
|
|
—
|
|
|
39
|
|
||||||
Total Liabilities and Shareholders’ (Deficiency) Equity
|
$
|
(3,693
|
)
|
|
$
|
7,933
|
|
|
$
|
7,861
|
|
|
$
|
9,657
|
|
|
$
|
(15,157
|
)
|
|
$
|
6,601
|
|
(Dollars in millions)
|
Weatherford
Ireland
|
|
Weatherford
Bermuda
|
|
Weatherford
Delaware
|
|
Other
Subsidiaries
|
|
Eliminations
|
|
Consolidation
|
||||||||||||
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net Income (Loss)
|
$
|
(481
|
)
|
|
$
|
(299
|
)
|
|
$
|
(216
|
)
|
|
$
|
(351
|
)
|
|
$
|
870
|
|
|
$
|
(477
|
)
|
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided (Used) by Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Charges from Parent or Subsidiary
|
—
|
|
|
(1
|
)
|
|
4
|
|
|
42
|
|
|
(45
|
)
|
|
—
|
|
||||||
Equity in (Earnings) Loss of Affiliates
|
472
|
|
|
161
|
|
|
186
|
|
|
—
|
|
|
(819
|
)
|
|
—
|
|
||||||
Other Adjustments
|
10
|
|
|
(117
|
)
|
|
(63
|
)
|
|
404
|
|
|
(6
|
)
|
|
228
|
|
||||||
Net Cash Provided (Used) by Operating Activities
|
1
|
|
|
(256
|
)
|
|
(89
|
)
|
|
95
|
|
|
—
|
|
|
(249
|
)
|
||||||
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Capital Expenditures for Property, Plant and Equipment
|
—
|
|
|
—
|
|
|
—
|
|
|
(58
|
)
|
|
—
|
|
|
(58
|
)
|
||||||
Capital Expenditures for Assets Held for Sale
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||||
Acquisition of Intellectual Property
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
||||||
Proceeds from Sale of Assets
|
—
|
|
|
—
|
|
|
—
|
|
|
26
|
|
|
—
|
|
|
26
|
|
||||||
Proceeds from Sale of Businesses and Equity Investment, Net
|
—
|
|
|
—
|
|
|
—
|
|
|
74
|
|
|
—
|
|
|
74
|
|
||||||
Net Cash Provided (Used) by Investing Activities
|
—
|
|
|
—
|
|
|
—
|
|
|
36
|
|
|
—
|
|
|
36
|
|
||||||
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Borrowings (Repayments) Short-term Debt, Net
|
—
|
|
|
225
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
228
|
|
||||||
Borrowings (Repayments) Long-term Debt, Net
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(15
|
)
|
||||||
Borrowings (Repayments) Between Subsidiaries, Net
|
(1
|
)
|
|
4
|
|
|
89
|
|
|
(92
|
)
|
|
—
|
|
|
—
|
|
||||||
Other, Net
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
||||||
Net Cash Provided (Used) by Financing Activities
|
(1
|
)
|
|
216
|
|
|
89
|
|
|
(96
|
)
|
|
—
|
|
|
208
|
|
||||||
Effect of Exchange Rate Changes On Cash and Cash Equivalents
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||
Net Increase (Decrease) in Cash and Cash Equivalents
|
—
|
|
|
(40
|
)
|
|
—
|
|
|
36
|
|
|
—
|
|
|
(4
|
)
|
||||||
Cash and Cash Equivalents at Beginning of Period
|
—
|
|
|
284
|
|
|
—
|
|
|
318
|
|
|
—
|
|
|
602
|
|
||||||
Cash and Cash Equivalents at End of Period
|
$
|
—
|
|
|
$
|
244
|
|
|
$
|
—
|
|
|
$
|
354
|
|
|
$
|
—
|
|
|
$
|
598
|
|
(Dollars in millions)
|
Weatherford
Ireland
|
|
Weatherford
Bermuda
|
|
Weatherford
Delaware
|
|
Other
Subsidiaries
|
|
Eliminations
|
|
Consolidation
|
||||||||||||
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net Income (Loss)
|
$
|
(245
|
)
|
|
$
|
(407
|
)
|
|
$
|
(14
|
)
|
|
$
|
(820
|
)
|
|
$
|
1,244
|
|
|
$
|
(242
|
)
|
Adjustments to Reconcile Net Income(Loss) to Net Cash Provided (Used) by Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Charges from Parent or Subsidiary
|
18
|
|
|
3
|
|
|
(11
|
)
|
|
594
|
|
|
(604
|
)
|
|
—
|
|
||||||
Equity in (Earnings) Loss of Affiliates
|
275
|
|
|
350
|
|
|
133
|
|
|
—
|
|
|
(758
|
)
|
|
—
|
|
||||||
Other Adjustments
|
(10
|
)
|
|
467
|
|
|
(872
|
)
|
|
354
|
|
|
118
|
|
|
57
|
|
||||||
Net Cash Provided (Used) by Operating Activities
|
38
|
|
|
413
|
|
|
(764
|
)
|
|
128
|
|
|
—
|
|
|
(185
|
)
|
||||||
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Capital Expenditures for Property, Plant and Equipment
|
—
|
|
|
—
|
|
|
—
|
|
|
(29
|
)
|
|
—
|
|
|
(29
|
)
|
||||||
Capital Expenditures for Assets Held for Sale
|
—
|
|
|
—
|
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
(9
|
)
|
||||||
Acquisition of Business, Net of Cash Acquired
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
||||||
Acquisition of Intellectual Property
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
||||||
Proceeds from Sale of Assets
|
—
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|
12
|
|
||||||
Proceeds from Sale of Businesses, Net
|
—
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|
—
|
|
|
25
|
|
||||||
Net Cash Provided (Used) by Investing Activities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Borrowings (Repayments) Short-term Debt, Net
|
—
|
|
|
(47
|
)
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
(54
|
)
|
||||||
Borrowings (Repayments) Long-term Debt, Net
|
—
|
|
|
(438
|
)
|
|
588
|
|
|
(2
|
)
|
|
—
|
|
|
148
|
|
||||||
Borrowings (Repayments) Between Subsidiaries, Net
|
(38
|
)
|
|
(17
|
)
|
|
176
|
|
|
(121
|
)
|
|
—
|
|
|
—
|
|
||||||
Other, Net
|
—
|
|
|
—
|
|
|
—
|
|
|
(40
|
)
|
|
—
|
|
|
(40
|
)
|
||||||
Net Cash Provided (Used) by Financing Activities
|
(38
|
)
|
|
(502
|
)
|
|
764
|
|
|
(170
|
)
|
|
—
|
|
|
54
|
|
||||||
Effect of Exchange Rate Changes On Cash and Cash Equivalents
|
—
|
|
|
—
|
|
|
—
|
|
|
(23
|
)
|
|
—
|
|
|
(23
|
)
|
||||||
Net Increase (Decrease) in Cash and Cash Equivalents
|
—
|
|
|
(89
|
)
|
|
—
|
|
|
(65
|
)
|
|
—
|
|
|
(154
|
)
|
||||||
Cash and Cash Equivalents at Beginning of Period
|
—
|
|
|
195
|
|
|
—
|
|
|
418
|
|
|
—
|
|
|
613
|
|
||||||
Cash and Cash Equivalents at End of Period
|
$
|
—
|
|
|
$
|
106
|
|
|
$
|
—
|
|
|
$
|
353
|
|
|
$
|
—
|
|
|
$
|
459
|
|
•
|
Our existing unsecured notes will be cancelled and exchanged for (a)
99%
of the common stock of the reorganized Company (the “New Common Stock”) and (b)
$1.25 billion
of new tranche B senior unsecured notes to be issued by the reorganized Company with a seven-year maturity. Holders of the Company’s unsecured notes shall have the option to convert up to
$500 million
of the tranche B unsecured notes to New Common Stock at the mid-point of plan equity value. The tranche B unsecured notes will be pari passu with the tranche A senior unsecured notes described below.
|
•
|
Our existing secured funded debt and unsecured revolving credit facility debt will be repaid in full in cash in connection with the Transaction.
|
•
|
All trade claims against the Company (whether arising prior to or after the commencement of the Cases) will be paid in full in the ordinary course of business.
|
•
|
Our existing equity will be cancelled and exchanged for (a)
1%
of the New Common Stock, and (b) three-year warrants to purchase
10%
of the New Common Stock.
|
•
|
Our DIP Facilities will be repaid or refinanced in full upon completion of the Transaction through the Company’s (a) entry into a first lien exit revolving credit facility in the principal amount of up to
$1.0 billion
and (b) issuance of up to
$1.25 billion
of new tranche A senior unsecured notes with a five-year maturity, which notes issuance will be fully backstopped by the Consenting Noteholders.
|
•
|
Production
offers production optimization services and a complete production ecosystem, featuring our artificial-lift portfolio, testing and flow-measurement solutions, and optimization software, to boost productivity and profitability.
|
•
|
Completions
is a suite of modern completion products, reservoir stimulation designs, and engineering capabilities that isolate zones and unlock reserves in deepwater, unconventional, and aging reservoirs.
|
•
|
Drilling and Evaluation
comprises a suite of services ranging from early well planning to reservoir management. The drilling services offer innovative tools and expert engineering to increase efficiency and maximize reservoir exposure. The evaluation services merge wellsite capabilities including wireline, logging while drilling, and surface logging with laboratory-fluid and core analyses to reduce reservoir uncertainty. On April 30, 2019, we completed the sale of our Reservoir Solutions business, also known as our laboratory services business, and our Surface Data Logging business for aggregate consideration of approximately $256 million.
|
•
|
Well Construction
builds or rebuilds well integrity for the full life cycle of the well. Using conventional to advanced equipment, we offer safe and efficient tubular running services in any environment. Our skilled fishing and re-entry teams execute under any contingency from drilling to abandonment, and our drilling tools provide reliable pressure control even in extreme wellbores. We also include our land drilling rig business as part of Well Construction. During 2018, we disposed of our Kuwait and Saudi Arabia land drilling rigs operations. In the first quarter of 2019, we completed the sale of our Algerian land drilling rigs and delivered two idle land drilling rigs from Iraq. We have also committed to plans to divest certain remaining land drilling rigs operations and other business operations for which we believe a sale is probable within the next twelve months.
|
|
WTI Oil
(a)
|
|
Henry Hub Gas
(b)
|
|
North
American
Rig Count
(c)
|
|
International Rig
Count
(c)
|
||||||
March 31, 2019
|
$
|
60.14
|
|
|
$
|
2.66
|
|
|
1,226
|
|
|
1,030
|
|
December 31, 2018
|
45.41
|
|
|
2.94
|
|
|
1,223
|
|
|
988
|
|
||
March 31, 2018
|
64.94
|
|
|
2.73
|
|
|
1,235
|
|
|
970
|
|
(a)
|
Price per barrel of West Texas Intermediate (“WTI”) crude oil as of the date indicated at Cushing, Oklahoma – Source: Thomson Reuters
|
(b)
|
Price per MM/BTU as of the date indicated at Henry Hub Louisiana – Source: Thomson Reuters
|
(c)
|
Average rig count – Source: Baker Hughes Rig Count
|
|
Three Months Ended
|
|
|
|
|
|||||||||
|
March 31,
|
|
|
|
|
|||||||||
(Dollars and shares in millions, except per share data)
|
2019
|
|
2018
|
|
Favorable (Unfavorable)
|
|
Percentage Change
|
|||||||
Revenues:
|
|
|
|
|
|
|
|
|||||||
Western Hemisphere
|
$
|
726
|
|
|
$
|
756
|
|
|
$
|
(30
|
)
|
|
(4
|
)%
|
Eastern Hemisphere
|
620
|
|
|
667
|
|
|
(47
|
)
|
|
(7
|
)%
|
|||
Total Revenues
|
1,346
|
|
|
1,423
|
|
|
(77
|
)
|
|
(5
|
)%
|
|||
|
|
|
|
|
|
|
|
|||||||
Operating Income (Loss):
|
|
|
|
|
|
|
|
|||||||
Western Hemisphere
|
9
|
|
|
24
|
|
|
(15
|
)
|
|
(63
|
)%
|
|||
Eastern Hemisphere
|
20
|
|
|
16
|
|
|
4
|
|
|
25
|
%
|
|||
Total Segment Operating Income (Loss)
|
29
|
|
|
40
|
|
|
(11
|
)
|
|
(28
|
)%
|
|||
Corporate General and Administrative
|
(32
|
)
|
|
(36
|
)
|
|
4
|
|
|
11
|
%
|
|||
Goodwill Impairment
|
(229
|
)
|
|
—
|
|
|
(229
|
)
|
|
—
|
%
|
|||
Restructuring and Transformation Charges
|
(20
|
)
|
|
(25
|
)
|
|
5
|
|
|
20
|
%
|
|||
Asset Write-Downs and Other
|
(49
|
)
|
|
(18
|
)
|
|
(31
|
)
|
|
(172
|
)%
|
|||
Total Operating Loss
|
(301
|
)
|
|
(39
|
)
|
|
(262
|
)
|
|
(672
|
)%
|
|||
|
|
|
|
|
|
|
|
|||||||
Interest Expense, Net
|
(155
|
)
|
|
(149
|
)
|
|
(6
|
)
|
|
(4
|
)%
|
|||
Bond Tender and Call Premium
|
—
|
|
|
(34
|
)
|
|
34
|
|
|
100
|
%
|
|||
Warrant Fair Value Adjustment
|
—
|
|
|
46
|
|
|
(46
|
)
|
|
(100
|
)%
|
|||
Currency Devaluation Charges
|
—
|
|
|
(26
|
)
|
|
26
|
|
|
100
|
%
|
|||
Other Expense, Net
|
(9
|
)
|
|
(8
|
)
|
|
(1
|
)
|
|
(13
|
)%
|
|||
Loss Before Income Taxes
|
(465
|
)
|
|
(210
|
)
|
|
(255
|
)
|
|
(121
|
)%
|
|||
Income Tax Provision
|
(12
|
)
|
|
(32
|
)
|
|
20
|
|
|
63
|
%
|
|||
Net Loss
|
(477
|
)
|
|
(242
|
)
|
|
(235
|
)
|
|
(97
|
)%
|
|||
Net Income Attributable to Noncontrolling Interests
|
4
|
|
|
3
|
|
|
1
|
|
|
33
|
%
|
|||
Net Loss Attributable to Weatherford
|
$
|
(481
|
)
|
|
$
|
(245
|
)
|
|
$
|
(236
|
)
|
|
(96
|
)%
|
|
|
|
|
|
|
|
|
|||||||
Net Loss per Diluted Share Attributable to Weatherford
|
$
|
(0.48
|
)
|
|
$
|
(0.25
|
)
|
|
$
|
(0.23
|
)
|
|
(92
|
)%
|
Weighted Average Diluted Shares Outstanding
|
1,003
|
|
|
994
|
|
|
(9
|
)
|
|
(1
|
)%
|
|||
Depreciation and Amortization
|
$
|
123
|
|
|
$
|
147
|
|
|
$
|
24
|
|
|
16
|
%
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
||||
|
March 31,
|
||||
|
2019
|
|
2018
|
||
Production
|
29
|
%
|
|
27
|
%
|
Completions
|
23
|
|
|
21
|
|
Drilling and Evaluation
|
25
|
|
|
25
|
|
Well Construction
|
23
|
|
|
27
|
|
Total
|
100
|
%
|
|
100
|
%
|
•
|
Western Hemisphere revenues decreased
$30 million
, or
4%
, in the
first quarter
of
2019
, compared to the
first quarter
of
2018
due to lower activity levels in the U.S. and Canada as a result of a decline in rig related activity and exploration spending, which has reduced demand for drilling, completion and production products and services. The decline in Canada was partially offset by higher activity in integrated service projects and product sales in Latin America.
|
•
|
Eastern Hemisphere revenues decreased
$47 million
, or
7%
, in the
first quarter
of
2019
, compared to the
first quarter
of
2018
. The decline in revenues was primarily due to lower revenues from our divested land drilling rigs businesses in the Middle East and North Africa. Increased revenues in the Completions product line partially offset this decline. Excluding the impact of revenues from the divested portion of the land drilling rigs business, revenues in the first quarter of 2019 increased $33 million, or 6%, compared to the first quarter of 2018.
|
•
|
Western Hemisphere
first quarter
2019
segment operating income of
$9 million
declined
$15 million
compared to the
first quarter
of
2018
driven by lower activity levels, lower operating margin product sales in Canada, start-up costs for projects in Latin America and employee retention expenses. These declines were partially offset by improved operating results from higher integrated service project activity in in Latin America.
|
•
|
Eastern Hemisphere segment operating income of
$20 million
improved
$4 million
, or
25%
, in the
first quarter
of
2019
compared to the
first quarter
of
2018
, due to the lower direct expenses, cost improvements from our transformation program offset by the impact of the divestiture of our land drilling rigs in the Middle East and North Africa. Excluding the impact of lower operating results from the divested portion of the land drilling rigs business, operating results in the first quarter of 2019 improved $21 million compared to the first quarter of 2018.
|
•
|
For the quarter ended
March 31, 2019
, our interim goodwill impairment tests indicated that goodwill for our North America reporting unit was impaired and as a result we incurred a goodwill impairment charge of
$229 million
. The impairment indicators during the quarter included lower activity levels and exploration and production capital spending that resulted in a decline in drilling and completions activity in the first quarter of 2019 with an uncertain activity outlook in North America for the rest of 2019 and beyond.
|
•
|
Restructuring and transformation charges
in the
first quarter
of
2019
decreased
$5 million
compared to the
first quarter
of 2018. Restructuring charges include severance charges, facility exit costs and transformation charges.
|
•
|
Asset write-downs and other charges
in the
first quarter
of
2019
increased
$31 million
compared to the
first quarter
of 2018. Charges in the first quarter of 2019
primarily included the loss on disposition of assets and businesses, other fees and asset write-downs, partially offset by a reduction of a contingency reserve on a legacy contract. Charges in the first quarter of 2018 primarily included asset write-downs and inventory charges, partially offset by a gain on purchase of a joint venture remaining interest.
|
|
Three Months Ended March 31,
|
||||||
(Dollars in millions)
|
2019
|
|
2018
|
||||
Net Cash Used in Operating Activities
|
$
|
(249
|
)
|
|
$
|
(185
|
)
|
Net Cash Provided by Investing Activities
|
36
|
|
|
—
|
|
||
Net Cash Provided by Financing Activities
|
208
|
|
|
54
|
|
(Dollars in millions)
|
March 31, 2019
|
||
Facilities
|
$
|
1,144
|
|
Less uses of facilities:
|
|
||
364-Day Credit Agreement
|
317
|
|
|
A&R Credit Agreement
|
230
|
|
|
Letters of Credit
|
206
|
|
|
Term Loan Agreement Principal Borrowing
|
298
|
|
|
Borrowing Availability
|
$
|
93
|
|
|
|
||
(Dollars in millions)
|
March 31, 2019
|
||
North America
|
$
|
—
|
|
Latin America
|
281
|
|
|
Western Hemisphere
|
281
|
|
|
|
|
||
Russia/China
|
37
|
|
|
Middle East/North Africa
|
43
|
|
|
Asia
|
143
|
|
|
Eastern Hemisphere
|
223
|
|
|
|
|
||
Total
|
$
|
504
|
|
•
|
A hypothetical 75 basis point increase in the discount rate used for Asia, holding all other assumptions constant, could result in a potentially material impairment charge to goodwill for the reporting unit.
|
•
|
A hypothetical five percentage point decrease in the growth rate used for Asia, holding all other assumptions constant, could result in a potentially material impairment charge to goodwill for the reporting unit.
|
•
|
A hypothetical 4x decrease in our valuation multiple used for Asia, holding all other assumptions constant, could result in a potentially material impairment charge to goodwill for the reporting unit.
|
•
|
our ability to satisfy our liquidity needs, including our ability to generate sufficient liquidity or cash flow from operations or to obtain adequate financing to fund our operations or otherwise meet our obligations as they come due in the future and our ability to continue as a going concern;
|
•
|
downturns in our industry which could affect the carrying value of our goodwill, intangible assets or other assets and impact our ability to generate sufficient liquidity;
|
•
|
our ability to confirm and complete the proposed financial restructuring in accordance with the terms of the proposed RSA, including our ability to negotiate definitive commitments for, and enter into, the DIP Facilities;
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•
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risks attendant to the bankruptcy process, including the effects thereof on our business and liquidity and on the interests of various constituents, the length of time that we might be required to operate in bankruptcy and the continued availability of operating capital during the pendency of such proceedings;
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•
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our high level of indebtedness, including following the Transaction, and its impact on our ability to maintain sufficient liquidity;
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•
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limited authorized share capital, access to capital, significantly higher cost of capital, or difficulty or inability to raise additional funds in the equity or debt capital markets or from other financing sources, as a result of changes in market conditions, our financial situation or our credit rating;
|
•
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the price and price volatility of oil, natural gas and natural gas liquids;
|
•
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global political, economic and market conditions, political disturbances, war, terrorist attacks, changes in global trade policies, weak local economic conditions and international currency fluctuations;
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•
|
increases in the prices and lack of availability of our procured products and services, including as a result of our suppliers shortening payment terms and/or tightening credit limits;
|
•
|
our ability to timely collect from customers;
|
•
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our ability to realize cost savings and business enhancements from our transformation efforts;
|
•
|
the impact of a potential suspension of trading or delisting of our ordinary shares on the New York Stock Exchange (the “NYSE”) on the liquidity and market price of our ordinary shares and our ability to access the public capital markets;
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•
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our ability to attract, motivate and retain employees, including key personnel;
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•
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nonrealization of expected benefits from our acquisitions or business dispositions and our ability to timely execute and close such acquisitions and dispositions;
|
•
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our ability to realize expected revenues and profitability levels from current and future contracts;
|
•
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our ability to manage our workforce, supply chain and business processes, information technology systems and technological innovation and commercialization, including the impact of our organization restructure, business enhancements, transformation efforts and the cost and support reduction plans;
|
•
|
potential non-cash asset impairment charges for long-lived assets, goodwill, intangible assets or other assets;
|
•
|
changes to our effective tax rate;
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•
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member-country quota compliance within the Organization of Petroleum Exporting Countries;
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•
|
adverse weather conditions in certain regions of our operations; and
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•
|
failure to ensure on-going compliance with current and future laws and government regulations, including but not limited to environmental and tax and accounting laws, rules and regulations.
|
•
|
our ability to develop, confirm and complete a Chapter 11 Plan to implement the Transaction or an alternative restructuring transaction;
|
•
|
the high costs of bankruptcy proceedings and related fees;
|
•
|
our ability to obtain court approval with respect to motions filed in the Cases from time to time;
|
•
|
our ability to comply with the proposed RSA terms and conditions;
|
•
|
our ability to maintain our relationships with our suppliers, service providers, customers, employees and other third parties;
|
•
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our ability to maintain contracts that are critical to our operations;
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•
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our ability to execute our business plan;
|
•
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our ability to attract, motivate and retain key employees;
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•
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the ability of third parties to seek and obtain court approval to terminate contracts and other agreements with us;
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•
|
the ability of third parties to seek and obtain court approval to terminate or shorten the exclusivity period for us to propose and confirm a Chapter 11 plan of reorganization, to appoint a Chapter 11 trustee, or to convert the Chapter 11 Cases to proceedings under Chapter 7 of the Bankruptcy Code; and
|
•
|
the actions and decisions of our creditors and other third parties who have interests in the Chapter 11 Cases that may be inconsistent with our plans.
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Exhibit Number
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Description
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**101
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The following materials from the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, formatted in XBRL (eXtensible Business Reporting Language):
(1) the unaudited Condensed Consolidated Balance Sheets, (2) the unaudited Condensed Consolidated Statements of Operations, (3) the unaudited Condensed Consolidated Statements of Comprehensive Income (Loss), (4) the unaudited Condensed Consolidated Statements of Cash Flows, and (5) the related notes to the unaudited Condensed Consolidated Financial Statements. |
*
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Management contract or compensatory plan or arrangement.
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**
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Submitted pursuant to Rule 405 and 406T of Regulation S-T.
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†
|
Filed herewith.
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††
|
Furnished herewith.
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Weatherford International plc
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Date: May 10, 2019
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By:
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/s/ Christoph Bausch
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Christoph Bausch
|
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Executive Vice President and
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Chief Financial Officer
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Date: May 10, 2019
|
By:
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/s/ Stuart Fraser
|
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Stuart Fraser
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Vice President and
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Chief Accounting Officer
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1.
|
Subsequent Closing Payments; Release
.
|
(a)
|
At the Subsequent Closing, Purchaser shall pay to Seller an amount equal to $40,000,000 for the Algeria Assets to be sold at the Subsequent Closing, as further set forth in paragraph 2 below. At or immediately following the Subsequent Closing, Seller shall pay to Purchaser an amount equal to the Settlement Amount set forth in Schedule I to this letter agreement in full without any deduction, withholding or set off of any nature whatsoever.
|
(b)
|
The Parties each acknowledge and agree that the payments, offsets and reimbursements described in Schedule I are and intended to fully and finally resolve all matters described in Schedule I (except as otherwise set forth therein). Accordingly, upon payment by Seller to Purchaser of the amount set forth in paragraph 1(a) above and Schedule I, Purchaser and Seller, each on behalf of itself and its respective stockholders and Affiliates, hereby irrevocably and forever releases, acquits and discharges the other Party and their respective stockholders and Affiliates of and from any and all claims, counterclaims, actions, causes or rights of action, suits, Liabilities, Losses, assertions, allegations, contentions, controversies and demands of any kind or nature whatsoever, whether at law or in equity, that either Purchaser or Seller or their respective stockholders or Affiliates now have, ever had or may have had, whether directly or in a representative or any other capacity, for, upon or by reason of any act, omission or other matter, cause or thing, in each case to the extent arising from the matters described in Schedule I (except as otherwise set forth therein). The foregoing includes an express, informed, knowing and voluntary waiver and relinquishment to the fullest extent permitted by applicable Law. The
|
2.
|
Rigs; Algeria Purchased Assets
. The Parties agree that at the Subsequent Closing, the Algeria Assets will be purchased and sold pursuant to
Sections 2.1
and
2.2
of the AK Purchase Agreement, except as follows:
|
(a)
|
Rigs numbered 814 and 815 and the related equipment and inventories, each as more fully described in Section 1.1(b)(i) of the Seller Disclosure Schedule (individually, each such Rig a “
Delayed Algeria Rig
” and collectively, the “
Delayed Algeria Rigs
”), shall not be transferred at the Subsequent Closing. The Parties agree that Seller shall move the Delayed Algeria Rigs and related equipment and inventory set forth in Schedule II from their current location to the FENNEC bonded yard, Hassi Messaoud (the “
Bonded Area
”), such process to be commenced by Seller as promptly as practicable following the Subsequent Closing. Seller shall use commercially reasonable best efforts to complete the transfer process as promptly as practicable. The transfer of each Delayed Algeria Rig and related equipment and inventory shall occur promptly following the time at which the relevant Delayed Algeria Rig arrives at the Bonded Area (and evidence reasonably satisfactory to Purchaser has been provided to Purchaser) (the date each such transfer occurs being the “
Delayed Algeria Rig Transfer Date
”). For purposes of the foregoing, the Parties further agree that (a) Seller shall (as a condition of Purchaser’s obligation to proceed with the purchase of the relevant Delayed Algeria Rig on the relevant Delayed Algeria Rig Transfer Date) be responsible for maintaining all customs consents required to transfer such Delayed Algeria Rig in the Bonded Area (but to the extent only that any such customs consent is required under applicable Law, as reasonably determined by Seller’s legal counsel, and not otherwise), (b) risk in the Delayed Algeria Rigs shall remain with Seller and the relevant Selling Entity until the relevant Delayed Algeria Rig Transfer Date, (c) the transfer to each Delayed Algeria Rig shall be documented pursuant to a stand-alone Asset Transfer Agreement (each a “
Delayed Algeria Rig Asset Transfer Agreement
”), (d) Seller shall comply with
Section 2.12
of the AK Purchase Agreement until the relevant Delayed Algeria Rig Transfer Date and (e) notwithstanding the delayed transfer of the Delayed Algeria Rigs, for purposes of the AK Purchase Agreement, the Subsequent Closing shall be deemed to have occurred on the date on which the purchase and sale of the other Algeria Assets has been consummated. For purposes of (b) above, the Parties agree that
Sections 6.1(f)
through
(h)
of the AK Purchase Agreement shall not apply, however in the event any Delayed Algeria Rig becomes inoperable or is destroyed prior to the relevant Delayed Algeria Rig Transfer Date, then the applicable Delayed Algeria Rig shall be deemed an “Excluded Rig” for purposes hereof and Purchaser shall not be required to proceed with the purchase of such Delayed Algeria Rig and shall be entitled to the immediate release from escrow and return of the Remaining Deposit (as defined below) in respect of such Delayed Algeria Rig.
|
(b)
|
In furtherance of its obligations to move the Delayed Rigs as set forth in paragraph 2(a) above, Seller shall pay, when due, all costs actually incurred by Purchaser relating to the transport of the Delayed Algeria Rigs to the Bonded Area. Conversely, Purchaser shall pay all costs related to the storage of the Delayed Algeria Rigs in the Bonded Area to the extent for each Rig these relate to a period after the relevant Delayed Algeria Rig Transfer Date for such Rig.
|
(c)
|
For purposes of paragraph 1(a) and paragraph 2(a) above, the Parties agree that at the Subsequent Closing, the Algeria Cash Consideration shall be reduced by an amount equal to $20,000,000, which such amount shall instead be paid on each Delayed Algeria Rig Transfer Date (in an amount equal to $10,000,000 per Delayed Algeria Rig). In addition, the amount of the Deposit to be credited against the Purchase Price for the Algeria Assets at the Subsequent Closing shall be reduced by $6,000,000, with the remaining $3,000,000 (the “
Remaining Deposit
”), being held in escrow until the relevant Delayed Algeria Rig Transfer Date (when it shall be reduced in an amount equal to $1,500,000 per Delayed Algeria Rig).
|
(d)
|
On each Delayed Algeria Rig Transfer Date (i) Seller shall deliver or cause to be delivered to Purchaser (A) the Delayed Algeria Rig Asset Transfer Agreement executed by the Selling Entity, (B) a certificate dated as of the Delayed Algeria Rig Transfer Date confirming the incumbency of each officer of the Selling Entity executing the Delayed Algeria Rig Asset Transfer Agreement, and (C) a release of any Encumbrance over such Delayed Algeria Rig and (ii) Purchaser shall deliver or cause to be delivered to Seller (x) a release of the amount of the Remaining Deposit to be released in respect of such Delayed Algeria Rig plus the balance of the amount due in respect of the applicable Delayed Algeria Rig under paragraph 2(b) above, (y) the Delayed Algeria Rig Asset Transfer Agreement executed by the Designated Affiliate and (z) a certificate dated as of the Delayed Algeria Rig Transfer Date confirming the incumbency of each officer of the Designated Affiliate executing the Delayed Algeria Rig Asset Transfer Agreement.
|
(e)
|
In respect of the Delayed Algeria Rigs, for the avoidance of doubt (i) Liabilities will only be Assumed Liabilities to the extent they relate to a period on or after the relevant Delayed Algeria Rig Transfer Date, (ii) Retained Taxes shall include any Taxes on or with respect to the relevant Delayed Algeria Rig for any period prior to the relevant Delayed Algeria Rig Transfer Dates and (iii)
Article 9
of the AK Purchase Agreement shall apply on the basis that Seller shall be responsible for all Tax Returns and Taxes on the Delayed Algeria Rigs up to the relevant Delayed Algeria Rig Transfer Dates.
|
(f)
|
On the applicable Delayed Algeria Rig Transfer Date, solely with respect to the Delayed Algeria Rigs and the applicable Selling Entity, Seller repeats the representations and warranties set forth in
Sections 3.2
,
3.3
,
3.8(a)
,
3.8(b)
, and
3.23
of the AK Purchase Agreement. On the applicable Delayed Rig Transfer Date, Seller represents and warrants that the applicable Delayed Algeria Rig, when reassembled by Purchaser using the equipment and inventory included in the Algeria Assets, and using reasonable and customary methods for such re-assembly, including normal mobilization requirements for a rig which has been stored unassembled for as long as such Delayed Algeria Rig, such Delayed Algeria Rig will be in good working order.
|
(g)
|
Once it occurs (and except as provided for in this letter agreement) the transfer of the Delayed Algeria Rigs shall have taken place as part of the Subsequent Closing and
Section 8.1
of the AK Purchase Agreement shall apply to the representations, warranties and covenants made by Seller under this letter agreement and the relevant Selling Entity under the Delayed Algeria Rig Asset Transfer Agreements (as if they had been made at the Subsequent Closing) save that any time limit that applies in respect of the Delayed Algeria Rigs for the purposes of
Section 8.4
of the AK Purchase Agreement shall be calculated by reference to the Delayed Algeria Rig Transfer Date for that Delayed Algeria Rig rather than the Subsequent Closing Date.
|
(h)
|
In the event that the transfer of the Delayed Algeria Rigs as provided for in this paragraph 2 cannot be accomplished by the Subsequent End Date, then such date shall automatically be extended, without any further action on behalf of the Parties, to May 30, 2019, which shall thereafter be the Subsequent End Date for purposes of the AK Purchase Agreement. If any Delayed Algeria Rig has not been transferred by the Subsequent End Date, as extended pursuant to this paragraph 2(h), then Purchaser (but not Seller either under this paragraph or under Section 7.1(i) of the AK Purchase Agreement) shall be entitled to terminate the AK Purchase Agreement in respect of such Delayed Algeria Rig pursuant to Section 7.1(i) of the AK Purchase Agreement, in which case it shall not be required to proceed with the purchase of such Delayed Algeria Rig and shall be entitled to the immediate release from escrow and return of the Remaining Deposit (as defined below) in respect of such Delayed Algeria Rig.
|
(i)
|
For purposes of
Section 1.1(b)
of the AK Purchase Agreement, the Parties acknowledge and agree that the Purchased Assets shall include the equipment listed in
Section 1.1(b)(i)
of the second
supplement to the Seller Disclosure Schedule, delivered to Purchaser and dated as of the date hereof, with the exception of the assets identified under the tab “Missing Assets”, which shall not be Purchased Assets, but will be excluded from the Subsequent Closing (“
Excluded Assets
”); it being further acknowledged and agreed that the equipment identified under the tab “Extra Assets” would be transferred and sold to Purchaser at the Subsequent Closing at no additional cost in replacement of the Excluded Assets. In furtherance of the foregoing, Purchaser hereby unconditionally and irrevocably waives any and all claims, actions, causes of action, demands, rights, benefits, claims for indemnification or otherwise it may have against Seller or its Affiliates with respect or otherwise relating to the Excluded Assets.
|
3.
|
Algeria Purchase Orders
. With respect to the AK Purchase Agreement, Seller has advised Purchaser of outstanding purchase orders in the approximate amount of $1,806,658.70.
Liability for payments on the balance of outstanding purchase orders such approximate amount will be determined in accordance with this paragraph 3. At the Subsequent Closing, Purchaser agrees to assume all payment obligations arising from such purchase orders that become due after the Subsequent Closing Date, and for which goods have not been delivered (or services rendered) as of the Subsequent Closing Date which payment obligations have an estimated aggregate amount of $1,092,255.01 (with all other payments and liabilities in respect of such purchase orders remaining the responsibility of Seller and its Affiliates) (the “
Category A Purchase Orders
”). Accordingly, it is anticipated the approximate amount of purchase orders which are not Category A Purchase Orders will be $714,403.69 (“
Category B Purchase Orders
”). During the three Business Days period following the Subsequent Closing, Purchaser and Seller will form a committee to review and examine the actual date of on-ground delivery of goods or the date on which services were actually rendered for purposes of determining whether or not, with respect to the Category A Purchase Orders, goods were delivered (or services rendered) prior to the Subsequent Closing Date. It is further agreed that with respect to Category B Purchase Orders, Purchaser shall notify Seller within five Business Days following the Subsequent Closing as to which such Category B Purchase Orders Purchaser (in its discretion) wishes to continue, in which case Purchaser shall be liable for all payment obligations that become due after the Subsequent Closing Date arising from those Category B Purchase Orders for which goods have not been delivered (or services rendered) as of the Subsequent Closing Date which Purchaser has elected to continue as aforesaid (with all other payments and liabilities in respect of the Category B Purchase Orders remaining the responsibility of Seller and its Affiliates). For purposes of such determination, the Parties agree to use such customary documents as are readily available, including delivery manifests, yard or rig manifests, service work approvals, and service delivery sheets (and the date of delivery on Seller’s internal purchase order system shall be disregarded). Purchaser agrees that Seller may immediately cancel any Category B Purchase Orders (or any purchase orders that are finally determined not to be Category A Purchase Orders following the review and examination described above) under which Purchaser does not assume a payment obligation under this paragraph 3, without Liability to Purchaser (although such cancellation shall be in respect of the future performance of the purchase orders only). Following the Subsequent Closing, the Parties agree to attach to this letter agreement a schedule of respective payments for Category A Purchase Orders and all Category B Purchase Orders as finally determined in accordance with this paragraph 3. For the avoidance of doubt, (I) any payments owed by a Party pursuant to this paragraph 3 shall by made by the relevant Party directly to the vendor and/or supplier set forth in the applicable purchase order and (II) any equipment, inventory or other asset delivered pursuant to a Category A Purchase Order or Category B Purchase Order shall be deemed a “Purchased Asset.” To the extent permitted by the terms of the applicable purchase order and upon Purchaser’s written request, Seller and its Affiliates will assign to Purchaser or its Designated Affiliates supplier warranties regarding the goods and services delivered/rendered under the Category A Purchase Orders and the Category B Purchase Orders. Purchaser shall indemnify the Seller Indemnified Parties in accordance with
Article 8
of the AK Purchase Agreement for all Losses incurred by a Seller Indemnified Party arising from the non-payment by Purchaser of any amounts due under the Category A Purchase Orders and Category B Purchase Orders for which it has assumed a payment obligation under this paragraph 3. Seller shall indemnify the Purchaser Indemnified Parties in accordance with
Article 8
of the AK Purchase Agreement for all Losses incurred by a Purchaser Indemnified Party arising from the non-payment by Seller of any amounts due under the Category A Purchase Orders and Category B Purchase Orders for which it has retained a payment obligation under this paragraph 3.
|
4.
|
Customs
.
|
(a)
|
The Parties acknowledge and agree that, for purposes of the consent of the Regional Customs Director described in Section 6.1(c) of the Seller Disclosure Schedule, the Regional Customs Director has indicated, in a letter dated December 23, 2018 (“
Customs Letter
”), that
a global authorization of assignment will be issued upon (i) the identification and location information of the purchaser, (ii) delivery of the documents numbered 1 to 5 in the Customs Letter and (iii) settlement of any possible litigation (collectively, the “
Conditions
”).
|
(b)
|
As a covenant under the AK Purchase Agreement, Seller undertakes to procure the satisfaction of the Conditions promptly following the Subsequent Closing, and will indemnify the Purchaser Indemnified Parties, as a breach of a covenant under
Section 8.1(b)
of the AK Purchase Agreement, for any Losses incurred by the Purchaser Indemnified Parties in relation to a failure by Seller to procure the satisfaction of the Conditions or delay in satisfying those Conditions;
provided
, that the Parties agree that Seller shall not be considered in breach of the foregoing covenant within the 90 day period after the Subsequent Closing if during such period Seller has used commercially reasonable best efforts to procure the satisfaction of the Conditions.
|
(c)
|
Notwithstanding anything in this paragraph 4 to the contrary, Purchaser hereby waives any requirement or condition that Rigs 814 and 815 be under the temporary importation regime at the applicable Delayed Algeria Rig Transfer Date.
|
5.
|
Credit and Performance Support Obligations
.
|
(a)
|
In accordance with the KSA Side Letter,
Section 5.11
of the AK Purchase Agreement is hereby further amended and restated, and supersedes the amendment and restatement agreed by the Parties in the Kuwait Side Letter, as follows:
|
(b)
|
For the avoidance of doubt, Seller confirms that in the updated list of Seller Guarantees provided on the date hereof with the updated
Section 5.11
of the Seller Disclosure Schedule, the only guarantees listed in relation to Rigs 814 and 815 are customs guarantees, except the performance guarantee issued to Sonatrach for the purpose of the drilling contract covering Rigs 810, 814 and 815 (the “
Sonatrach Multiple Guarantee
”). It is also agreed that (i) Purchaser shall also be entitled to check the updated list after the Subsequent Closing to identify Seller Guarantees that are no longer required or which do not relate to Purchased Assets, in which case notwithstanding the terms of Section 5.11 of the AK Purchase Agreement such Seller Guarantees shall be removed from the list and shall not at any stage be considered to be Seller Guarantees, so that Purchaser shall have no Liabilities in respect of the same whether under the AK Purchase Agreement or the Transition Services Agreement, (ii) subject to paragraph (iii) below, Purchaser shall have no Liabilities in respect of any Seller Guarantees that continue to be required in relation to Rigs 814 and 815 (or any obligation to make any payment pursuant to the Transition Services Agreement in respect of the maintenance of the same pursuant) in respect of any period prior to the Delayed Algerian Rig Transfer for such Rig, and (iii) paragraph (ii) shall not apply in respect of the Sonatrach Multiple Guarantee.
|
(c)
|
The Parties agree that
Exhibit A
of the Transition Service Agreement shall be updated to reflect the amendment and restatement of
Section 5.11
of the AK Purchase Agreement as set forth in paragraph 5(a) above.
|
6.
|
Novation Agreements
.
|
(a)
|
For the avoidance of doubt, the Parties confirm that for purposes of the AK Purchase Agreement and KSA Purchase Agreement, (i) all Liabilities under any Drilling Contract subject of a Novation Agreement, or under any Novation Agreement, that arise from and after the relevant Closing (and to the extent relating to a period on or after such Closing) will be “Assumed Liabilities”, and all such Liabilities that arise or relate to a period prior to Closing will be “Excluded Liabilities” and (ii) with respect to the definition of “Assumed Liabilities” in Section 1.1 of the AK Purchase Agreement and KSA Purchase Agreement, “Liabilities” assumed by Purchaser under the Novation Agreements refers only to Liabilities under the Novation Agreements that arise from and after the relevant Closing (and to the extent relating to a period on or after such Closing).
|
(b)
|
Purchaser acknowledges and confirms that Rig 802 is in the process of being demobilized from the last well under the existing Drilling Contract. Seller on behalf of itself and its Affiliates hereby waives any entitlement to share in or receive all or any part of the demobilisation fee payable under the Drilling Contract for Rig 802 (with Repsol Exploration Argelia S.A.) and agrees that the full amount of that demobilization fee shall be retained by Purchaser or its Designated Affiliate. To the extent that Seller or any of its Affiliates receives any part of such demobilisation fee, Seller shall procure that such payment is promptly paid over to Purchaser or its Designated Affiliate. Notwithstanding the preceding, Purchaser shall be responsible for, and shall pay Seller any costs reasonably incurred by Seller in connection with the demobilization and transport of Rig 802 from its current location as part of the demobilization of Rig 802, notwithstanding that such demobilization costs may have been incurred prior to the Subsequent Closing.
|
(c)
|
The Parties acknowledge that pursuant to the Novation Agreement in respect of Rig 810 (with Sonatrach), Weatherford Holdings BVI Limited (“
WHBL
”) has agreed to guarantee the performance by Purchaser’s Designated Affiliate under the related Drilling Contract. It is therefore agreed that, for the duration of the Drilling Contract (and any extensions or other amendments thereto) (i) where WHBL is or becomes subject to any Liability arising from and after the Subsequent Closing (and to the extent relating to a period on or after Subsequent Closing) with respect to such guarantee, such Liabilities will be “Assumed Liabilities” for the purposes of the AK Purchase Agreement for which indemnification shall be available to Seller in accordance with Article 8 thereof and (ii) where WHBL is or becomes subject to any Liability arising before the Subsequent Closing (or relating to a period prior to the Subsequent Closing) with respect to such guarantee, such Liabilities will be “Excluded Liabilities” for the purposes of the AK Purchase Agreement for which indemnification shall be available to Purchaser in accordance with Article 8 thereof. Purchaser agrees, and shall cause its Designated Affiliate to perform the services under the Novation Agreement in respect of Rig 810 and related Drilling Contract in accordance with, and subject to the terms
|
(d)
|
In the event that the Drilling Contract for Rig 810 (with Sonatrach) is terminated prior to December 31, 2019, Seller shall pay to Purchaser an amount equal to thirty three and one third percent (33 and 1/3 %) of all amounts (including daily rate and other payments) that would have been payable by Sonatrach under such Drilling Contract had it not been terminated. Any payments owed shall be made in full without any deduction, withholding or set off of any nature whatsoever on or before the last Business Day of each month with respect to amounts owed for such month, with a final payment to be made on December 31, 2019. Notwithstanding the preceding, no amounts shall be owed by Seller to Purchaser if the Drilling Contract for Rig 810 is terminated by Sonatrach prior to December 31, 2019 as a result of, or due to a breach of such Drilling Contract by Purchaser or its Designated Affiliate.
|
(e)
|
Seller acknowledges that the Novation Agreements in respect of Rig 801 and 828 provide that payments prior to the effective date of such Novation Agreements shall be payable to WHBL. However, to the extent WHBL receives any sums due under the relevant Drilling Contracts in respect of any period after Closing Seller shall procure that such amount is immediately paid to Purchaser or as it shall direct in full without any deduction, withholding or set off of any nature whatsoever.
|
(f)
|
The Parties acknowledge that the Novation Agreement in respect of Rig 810 (with Sonatrach) (the “
Rig 810 Novation Agreement
”) has been submitted to Sonatrach for signature but has not yet been signed by Sonatrach and when it is signed it may have an effective date which is later than the Subsequent Closing Date. The Parties agree that notwithstanding any such later effective date for such Rig 810 Novation Agreement, as between the Parties paragraph 6(a) of this letter agreement shall apply from the Subsequent Closing Date in relation to Liabilities under the Drilling Contract in respect of Rig 810 and that from such Subsequent Closing Date all rights and benefits under the Drilling Contract in respect of Rig 810 shall belong to and be passed to the Purchaser’s Designated Affiliate. Unless and until the Rig 810 Novation Agreement is signed by Sonatrach, Seller shall procure that WBHL shall continue its corporate existence and shall hold such Rig 810 Drilling Contract and any monies, goods or other benefits received thereunder as trustee for Purchaser and its Designated Affiliate in title absolutely. Purchaser’s Designated Affiliate shall (if such sub-contracting is permissible and lawful under the Rig 810 Drilling Contract), as sub-contractor, perform all the obligations under such Rig 810 Drilling Contract and, where sub-contracting is not permissible, Purchaser’s Designated Affiliate shall perform such obligations as agent, or otherwise enter into such arrangements with Seller or its Affiliates, on commercially reasonable terms, under which Seller or its Affiliates would perform such obligations. Unless and until any such Rig 810 Drilling Contract is novated, Seller shall give all such assistance as Purchaser may reasonably require to enable Purchaser’s Designated Affiliate to enforce its rights under such Rig 810 Drilling Contract and (without limitation) shall provide access to all relevant books, documents and other information in relation to such Rig 810 Drilling Contract as Purchaser may reasonably require from time to time.
|
7.
|
Backlog
. As an accommodation by Seller to Purchaser, Seller has agreed to cover, for thirty days, the discount granted to OC Sonatrach - First Calgary Petroleums LP - Algeria. The Parties agree that this discount will not be considered when calculating the Backlog for the Subsequent Closing.
|
8.
|
Employees.
The Parties agree that the list of Transferring Employees referred to in Section 10.1(c) of the Purchaser Disclosure Schedule shall be replaced with the list attached as Schedule III to this letter agreement.
|
9.
|
Transition Services Agreement; Service Fee Free Period
. The Parties agree that notwithstanding that the Additional Conditions referred to in
Section 2.1
of the Transition Services Agreement have not been satisfied the Service Fee Free Period under the Transaction Services Agreement in respect of (i) KSA will expire on February 28, 2019, and (ii) Algeria will expire 45 days after the Subsequent Closing for Algeria.
|
10.
|
Miscellaneous
.
|
1.
|
Each of the parties to this letter agreement represents and warrants that (i) such Person has all requisite corporate power and authority to execute, deliver and perform this letter agreement and (ii) the execution, delivery and performance of this letter agreement have been duly authorized by all requisite corporate approvals on the part of such Person.
|
2.
|
The Parties agree that Purchase Agreement is and shall continue to be in full force and effect in accordance with its terms, and, except as expressly set forth in this letter agreement, no other modification to the Purchase Agreement is agreed to or implied. Without limiting the generality of the foregoing, and for the avoidance of doubt, nothing in this letter agreement is intended to constitute a waiver of any right or otherwise modify the obligations of the Parties under the Purchase Agreement, including without limitation, with respect to any claim that Seller might have under
Article 9
of the Purchase Agreement, or with respect the rights and obligations of the Parties in respect of the Iraq Rigs under the Kuwait Side Letter. This letter agreement and the schedules and exhibits hereto, together with the Purchase Agreement and the other Transaction Documents, constitute the entire agreement among the parties hereto and their respective Affiliates with respect to the subject matter hereof and thereof. The Parties further agree that
Section 11.5
,
Section 11.6
and
Sections 11.8
through
11.16
of the Purchase Agreement are incorporated herein by reference as if set forth in full herein and shall apply to the terms and provisions of this letter agreement and the Parties hereto
mutatis mutandis.
For the avoidance of doubt, this letter agreement shall be deemed a “Transaction Document” for purposes of the Purchase Agreement.
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11.
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Seller Parent Guarantee
. The Seller Parent has executed this letter agreement where provided for below to confirm that the guarantee it has given under
Section 11.17
of the AK Purchase Agreement remains in full force and effect in accordance with its terms.
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Sincerely yours,
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WEATHERFORD WORLDWIDE HOLDINGS GMBH
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By:
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/s/ Valentin Mueller
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Name:
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Valentin Mueller
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Title:
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Managing Officer
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Solely for purposes of paragraph 11 of this letter agreement:
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WEATHERFORD INTERNATIONAL PLC
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By:
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/s/ Valentin Mueller
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Name:
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Valentin Mueller
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Title:
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Vice President
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Accepted and agreed on February 27, 2019:
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ADES INTERNATIONAL HOLDING LTD.
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By:
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/s/ Dr. Mohamed Farouk
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Name:
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Dr. Mohamed Farouk
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Title:
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Director
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1.
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Delayed Rig Transfer Date Payments; Release
.
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(a)
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The date hereof shall be the Delayed Rig Transfer Date for each of the Delayed Algeria Rigs and on the date hereof Purchaser shall pay to Seller an amount equal to $20,000,000 for the Delayed Algeria Rigs to be sold on the Delayed Rig Transfer Date, as set forth in (and in accordance with the terms of) the Algeria Side Letter. At or immediately following the Delayed Rig Transfer Date, Purchaser shall pay to Seller an amount equal to the Settlement Amount set forth in Schedule I to this letter agreement in full without any deduction, withholding or set off of any nature whatsoever.
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(b)
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The Parties each acknowledge and agree that the reimbursements described in Schedule I are and intended to fully and finally resolve all matters described in Schedule I (except as otherwise set forth therein). Accordingly, upon payment by Purchaser to Seller of the amount set forth in paragraph 1(a) above and Schedule I, Purchaser and Seller, each on behalf of itself and its respective stockholders and Affiliates, hereby irrevocably and forever releases, acquits and discharges the other Party and their respective stockholders and Affiliates of and from any and all claims, counterclaims, actions, causes or rights of action, suits, Liabilities, Losses, assertions, allegations, contentions, controversies and demands of any kind or nature whatsoever, whether at law or in equity, that either Purchaser or Seller or their respective stockholders or Affiliates now have, ever had or may have had, whether directly or in a representative or any other capacity, for, upon or by reason of any act, omission or
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2.
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Customs
.
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(a)
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The Seller covenants (as a covenant under the AK Purchase Agreement), that
the Delayed Algeria Rigs have now been placed in the Bonded Area.
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(b)
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The Parties hereto agree that to the extent the sale and purchase of the Delayed Algeria Rigs is subject to a requirement for authorization from the Territory Customs Administration such authorisation shall be obtained by the Seller (the “
Condition
”).
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(c)
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As a covenant under the AK Purchase Agreement, Seller undertakes to procure the satisfaction of the Condition promptly following the Delayed Rig Transfer Date, and will indemnify the Purchaser Indemnified Parties, as a breach of a covenant under
Section 8.1(b)
of the AK Purchase Agreement, for any Losses incurred by the Purchaser Indemnified Parties in relation to a failure by Seller to procure the satisfaction of the Condition or delay in satisfying those Condition;
provided
, that the Parties agree that Seller shall not be considered in breach of the foregoing covenant within the 90 day period after the Delayed Rig Transfer Date if during such period Seller has used commercially reasonable best efforts to procure the satisfaction of the Condition.
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(d)
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Notwithstanding anything in this paragraph 2 to the contrary, Purchaser hereby waives any requirement or condition that Rigs 814 and 815 be under the temporary importation regime at the applicable Delayed Algeria Rig Transfer Date.
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3.
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Miscellaneous
.
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(a)
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Each of the parties to this letter agreement represents and warrants that (i) such Person has all requisite corporate power and authority to execute, deliver and perform this letter agreement and (ii) the execution, delivery and performance of this letter agreement have been duly authorized by all requisite corporate approvals on the part of such Person.
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(b)
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The Parties agree that Purchase Agreement is and shall continue to be in full force and effect in accordance with its terms, and, except as expressly set forth in this letter agreement, no other modification to the Purchase Agreement is agreed to or implied. Without limiting the generality of the foregoing, and for the avoidance of doubt, nothing in this letter agreement is intended to constitute a waiver of any right or otherwise modify the obligations of the Parties under the Purchase Agreement, including without limitation, with respect to any claim that Seller might have under
Article 9
of the Purchase Agreement, or with respect the rights and obligations of the Parties in respect of the Iraq Rigs under the Kuwait Side Letter. This letter agreement and the schedules and exhibits hereto, together with the Purchase Agreement and the other Transaction Documents, constitute the entire agreement among the parties hereto and their respective Affiliates with respect to the subject matter hereof and thereof. The Parties further agree that
Section 11.5
,
Section 11.6
and
Sections 11.8
through
11.16
of the Purchase Agreement are incorporated herein by reference as if set forth in full herein and shall apply to the terms and provisions of this letter agreement and the Parties hereto
mutatis mutandis.
For the avoidance of doubt, this
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4.
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Seller Parent Guarantee
. The Seller Parent has executed this letter agreement where provided for below to confirm that the guarantee it has given under
Section 11.17
of the AK Purchase Agreement remains in full force and effect in accordance with its terms.
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Sincerely yours,
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WEATHERFORD WORLDWIDE HOLDINGS GMBH
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By:
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/s/ Josh McMorrow
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Name:
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Josh McMorrow
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Title:
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Managing Officer
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Solely for purposes of paragraph 4 of this letter agreement:
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WEATHERFORD INTERNATIONAL PLC
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By:
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/s/ Josh McMorrow
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Name:
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Josh McMorrow
|
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Title:
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Vice President
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Accepted and agreed on March 18, 2019:
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ADES INTERNATIONAL HOLDING PLC
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By:
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/s/ Dr. Mohamed Farouk
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Name:
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Dr. Mohamed Farouk
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Title:
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Director
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1.
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Additional Closing Payment; Purchase Orders; Rig Capital Expenditure Program; Working Capital Adjustment; Employee Matters
.
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(a)
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On the Iraq Transfer Date for Rig 827, in addition to the Purchase Price for Rig 827, Purchaser shall pay to Seller an amount equal to $308,586.29, representing amounts owed to Seller for packing and transportation costs (but not the port costs) pursuant to the Kuwait Side Letter.
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(b)
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On or before April 15, 2019, Purchaser shall (to the extent the expenses are validated by Purchaser after receipt of accompanying invoices, supporting documents and receipts) pay to Seller an amount equal to $7,424,112.09, representing all support and advance funds provided by Seller to Purchaser in the State of Kuwait and the Kingdom of Saudi Arabia as of the Iraq Transfer Date for Rig 827. Seller shall provide to Purchaser copies of all invoices, supporting documents and receipts reasonably requested by Purchaser to allow Purchaser to validate that such amounts were incurred by Seller and its Affiliates. For the avoidance of doubt this letter does not prejudice the rights of either Party in relation any disagreement as to whether an amount has been validated.
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(a)
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The Parties agree that, for purposes of paragraph 4 of the Kuwait Side Letter (and
Section 5.2(b)
of the AK Purchase Agreement), the payment date for the second installment of $6,000,000 shall be extended to April 15, 2019.
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(b)
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The Parties agree that, for purposes of
Section 2.5(c)
of the AK Purchase Agreement, the 30 day dispute period referred to therein shall be extended 14 days, such that if the Parties do not resolve all items disputed pursuant to
Section 2.5(b)
of the AK Purchase Agreement by April 11, 2019, then the parties will submit the remaining items in dispute to Deloitte Touche Tohmatsu Limited for resolution, or if that firm is unwilling or unable to serve, the Parties will engage another mutually agreeable independent accounting firm of recognized international standing, which firm is not the regular auditing firm of Purchaser or Seller.
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(c)
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The Parties agree that for purposes of the AK Purchase Agreement, Mohcen Belhachani shall not be deemed a Transferring Employee.
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2.
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Miscellaneous
.
|
(a)
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Each of the parties to this letter agreement represents and warrants that (i) such Person has all requisite corporate power and authority to execute, deliver and perform this letter agreement and (ii) the execution, delivery and performance of this letter agreement have been duly authorized by all requisite corporate approvals on the part of such Person.
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(b)
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The Parties agree that Purchase Agreement is and shall continue to be in full force and effect in accordance with its terms, and, except as expressly set forth in this letter agreement, no other modification to the Purchase Agreement is agreed to or implied. Without limiting the generality of the foregoing, and for the avoidance of doubt, nothing in this letter agreement is intended to constitute a waiver of any right or otherwise modify the obligations of the Parties under the Purchase Agreement, including without limitation, with respect to any claim that Seller might have under
Article 9
of the Purchase Agreement, or with respect the rights and obligations of the Parties in respect of the Iraq Rigs under the Kuwait Side Letter. This letter agreement and the schedules and exhibits hereto, together with the Purchase Agreement and the other Transaction Documents, constitute the entire agreement among the parties hereto and their respective Affiliates with respect to the subject matter hereof and thereof. The Parties further agree that
Section 11.5
,
Section 11.6
and
Sections 11.8
through
11.16
of the Purchase Agreement are incorporated herein by reference as if set forth in full herein and shall apply to the terms and provisions of this letter agreement and the Parties hereto
mutatis mutandis.
For the avoidance of doubt, this letter agreement shall be deemed a “Transaction Document” for purposes of the Purchase Agreement.
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3.
|
Seller Parent Guarantee
. The Seller Parent has executed this letter agreement where provided for below to confirm that the guarantee it has given under
Section 11.17
of the AK Purchase Agreement remains in full force and effect in accordance with its terms.
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Sincerely yours,
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WEATHERFORD WORLDWIDE HOLDINGS GMBH
|
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By:
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/s/ Josh McMorrow
|
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Name:
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Josh McMorrow
|
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Title:
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Managing Officer
|
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Solely for purposes of paragraph 3 of this letter agreement:
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WEATHERFORD INTERNATIONAL PLC
|
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By:
|
/s/ Josh McMorrow
|
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Name:
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Josh McMorrow
|
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Title:
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Vice President
|
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Accepted and agreed on March 25, 2019:
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ADES INTERNATIONAL HOLDING PLC
|
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By:
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/s/ Dr. Mohamed Farouk
|
|
Name:
|
Dr. Mohamed Farouk
|
|
Title:
|
Director
|
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1.
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I have reviewed this
quarterly report
on
Form 10-Q
of Weatherford International plc;
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2.
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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;
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3.
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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;
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4.
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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:
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a)
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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;
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b)
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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;
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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
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d)
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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
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5.
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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)
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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
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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.
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Date: May 10, 2019
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/s/ Mark A. McCollum
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Mark A. McCollum
|
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President and Chief Executive Officer
|
1.
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I have reviewed this
quarterly report
on
Form 10-Q
of Weatherford International plc;
|
2.
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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;
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3.
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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;
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4.
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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)
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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
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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)
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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.
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Date: May 10, 2019
|
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/s/ Christoph Bausch
|
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Christoph Bausch
|
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Executive Vice President and
|
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Chief Financial Officer
|
(1)
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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.
|
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/s/ Mark A. McCollum
|
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Name:
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Mark A. McCollum
|
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Title:
|
President and Chief Executive Officer
|
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Date:
|
May 10, 2019
|
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(1)
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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.
|
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/s/ Christoph Bausch
|
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Name:
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Christoph Bausch
|
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Title:
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Executive Vice President and Chief Financial Officer
|
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Date:
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May 10, 2019
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