UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended ~~June 30, 2020~~March 31, 2021


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

			For the transition period from _________________________ to _________________________

Commission file number: 001-36246

Civeo Corporation

(Exact name of registrant as specified in its charter)


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

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

(713) 510-2400

(Registrant’s telephone number, including area code)

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


Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Shares, no par value	CVEO	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


Yes			☒			No			☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).


Yes			☒			No			☐

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

Large Accelerated Filer

☐

Accelerated Filer

☒

Emerging Growth Company

☐

Non-Accelerated Filer

☐

Smaller Reporting Company

☒

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


Yes			☐			No			☒

The Registrant had ~~170,578,068~~14,292,866 common shares outstanding as of ~~July 24, 2020.~~April 26, 2021.

CIVEO CORPORATION

INDEX


			Page No.
Part I -- FINANCIAL INFORMATION

Item 1. Financial Statements:

Consolidated Financial Statements
Unaudited Consolidated Statements of Operations for the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~			4
Unaudited Consolidated Statements of Comprehensive Income (Loss) for the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~			5
Consolidated Balance Sheets – as of ~~June 30, 2020~~March 31, 2021 (unaudited) and December 31, ~~2019~~2020			6
Unaudited Consolidated Statements of Changes in Shareholders’ Equity for the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~			7
Unaudited Consolidated Statements of Cash Flows for the ~~Six~~Three Months Ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~			8
Notes to Unaudited Consolidated Financial Statements			9

Cautionary Statement Regarding Forward-Looking Statements			2019

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			2019

Item 3. Quantitative and Qualitative Disclosures About Market Risk			3731

Item 4. Controls and Procedures			3731


Part II -- OTHER INFORMATION

Item 1. Legal Proceedings			3832

Item 1A. Risk Factors			3832

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			3832

Item 6. Exhibits			3933

(a) Index of Exhibits			3933

Signature Page			4034

PART I -- FINANCIAL INFORMATION

ITEM 1. Financial Statements

CIVEO CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, Except Per Share Amounts)


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020
Revenues:	Revenues:									Revenues:
Service and other	Service and other	$	110,006	$	112,719	$	239,405	$	212,798	Service and other	$	121,996	$	129,399
Rental	Rental	3,865		7,625		10,044		14,115		Rental	3,064		6,179
Product	Product	831		1,809		4,045		3,790		Product	370		3,214
		114,702		122,153		253,494		230,703			125,430		138,792
Costs and expenses:	Costs and expenses:									Costs and expenses:
Service and other costs	Service and other costs	78,860		77,659		174,904		150,303		Service and other costs	96,462		96,044
Rental costs	Rental costs	3,615		6,357		8,428		11,507		Rental costs	2,970		4,813
Product costs	Product costs	658		1,224		3,114		3,060		Product costs	378		2,456
Selling, general and administrative expenses	Selling, general and administrative expenses	11,490		12,530		25,427		28,626		Selling, general and administrative expenses	14,181		13,937
Depreciation and amortization expense	Depreciation and amortization expense	22,205		30,996		47,707		61,778		Depreciation and amortization expense	21,269		25,502
Impairment expense	Impairment expense	—		5,546		144,120		5,546		Impairment expense	0		144,120
Other operating expense (income)		(285)		(103)		704		(168)
Other operating expense										Other operating expense	71		989
		116,543		134,209		404,404		260,652			135,331		287,861
Operating loss	Operating loss	(1,841)		(12,056)		(150,910)		(29,949)		Operating loss	(9,901)		(149,069)

Interest expense	Interest expense	(3,854)		(6,720)		(9,449)		(13,355)		Interest expense	(3,362)		(5,595)

Interest income	Interest income	4		22		20		49		Interest income	0		16
Other income	Other income	12,642		1,055		12,667		4,033		Other income	4,914		25
Income (loss) before income taxes		6,951		(17,699)		(147,672)		(39,222)
Loss before income taxes										Loss before income taxes	(8,349)		(154,623)
Income tax (expense) benefit	Income tax (expense) benefit	(122)		2,850		8,689		7,334		Income tax (expense) benefit	(1,076)		8,811
Net income (loss)		6,829		(14,849)		(138,983)		(31,888)
Net loss										Net loss	(9,425)		(145,812)
Less: Net income attributable to noncontrolling interest	Less: Net income attributable to noncontrolling interest	222		—		480		—		Less: Net income attributable to noncontrolling interest	59		258
Net income (loss) attributable to Civeo Corporation		6,607		(14,849)		(139,463)		(31,888)
Net loss attributable to Civeo Corporation										Net loss attributable to Civeo Corporation	(9,484)		(146,070)
Less: Dividends attributable to Class A preferred shares	Less: Dividends attributable to Class A preferred shares	471		461		939		920		Less: Dividends attributable to Class A preferred shares	478		468
Net income (loss) attributable to Civeo common shareholders		$	6,136	$	(15,310)	$	(140,402)	$	(32,808)
Net loss attributable to Civeo common shareholders										Net loss attributable to Civeo common shareholders	$	(9,962)	$	(146,538)

Per Share Data (see Note 8)
Basic net income (loss) per share attributable to Civeo Corporation common shareholders		$	0.03	$	(0.09)	$	(0.83)	$	(0.20)
Per Share Data (see Note 7) (1)										Per Share Data (see Note 7) (1)
Basic net loss per share attributable to Civeo Corporation common shareholders										Basic net loss per share attributable to Civeo Corporation common shareholders	$	(0.70)	$	(10.43)

Diluted net income (loss) per share attributable to Civeo Corporation common shareholders		$	0.03	$	(0.09)	$	(0.83)	$	(0.20)
Diluted net loss per share attributable to Civeo Corporation common shareholders										Diluted net loss per share attributable to Civeo Corporation common shareholders	$	(0.70)	$	(10.43)

Weighted average number of common shares outstanding:	Weighted average number of common shares outstanding:									Weighted average number of common shares outstanding:
Basic	Basic	169,812		167,532		169,165		166,437		Basic	14,211		14,043
Diluted	Diluted	169,990		167,532		169,165		166,437		Diluted	14,211		14,043

(1)Reflects our 1-for-12 reverse share split that became effective November 19, 2020. See Note 1 - Description of Business and Basis of Presentation to the notes to the unaudited consolidated financial statements included in Item 1 of this quarterly report for further discussion.

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

CIVEO CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In Thousands)

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
Net income (loss) $ 6,829 $ (14,849) $ (138,983) $ (31,888)
Other comprehensive income (loss), net of taxes:
Foreign currency translation adjustment, net of 0 taxes 29,385 1,084 (19,156) 6,463
Total other comprehensive income (loss), net of taxes 29,385 1,084 (19,156) 6,463
Comprehensive income (loss) 36,214 (13,765) (158,139) (25,425)
Less: Comprehensive income attributable to noncontrolling interest 303 — 466 —
Comprehensive income (loss) attributable to Civeo Corporation
$ 35,911 $ (13,765) $ (158,605) $ (25,425)


	Three Months Ended March 31,
	2021		2020

Net loss	$	(9,425)	$	(145,812)

Other comprehensive income (loss), net of taxes:
Foreign currency translation adjustment, net of 0 taxes	(1,627)		(48,541)
Total other comprehensive loss, net of taxes	(1,627)		(48,541)

Comprehensive loss	(11,052)		(194,353)
Less: Comprehensive income attributable to noncontrolling interest	49		163
Comprehensive loss attributable to Civeo Corporation	$	(11,101)	$	(194,516)

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

CIVEO CORPORATION

CONSOLIDATED BALANCE SHEETS

(In Thousands, Excluding Share Amounts)


	March 31, 2021		December 31, 2020
	(Unaudited)
ASSETS

Current assets:
Cash and cash equivalents	$	5,455	$	6,155
Accounts receivable, net	87,783		89,782
Inventories	6,677		6,181
Prepaid expenses	4,312		7,020
Other current assets	4,433		6,165
Assets held for sale	0		3,910
Total current assets	108,660		119,213

Property, plant and equipment, net	468,961		486,930
Goodwill	8,601		8,729
Other intangible assets, net	99,269		99,749
Operating lease right-of-use assets	22,338		22,606
Other noncurrent assets	2,349		3,626
Total assets	$	710,178	$	740,853

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:
Accounts payable	$	42,336	$	42,056
Accrued liabilities	20,801		27,349
Income taxes	255		203
Current portion of long-term debt	35,047		34,585
Deferred revenue	5,983		6,812
Other current liabilities	6,354		5,760
Total current liabilities	110,776		116,765

Long-term debt, less current maturities	200,756		214,000

Operating lease liabilities	18,941		19,834
Other noncurrent liabilities	15,566		14,897
Total liabilities	346,039		365,496

Commitments and contingencies (Note 10)	0		0

Shareholders’ Equity:
Preferred shares (Class A Series 1, 0 par value; 50,000,000 shares authorized, 9,042 shares issued and outstanding, respectively; aggregate liquidation preference of $95,991,601 and $95,514,031 as of March 31, 2021 and December 31, 2020)	60,494		60,016
Common shares (0 par value; 46,000,000 shares authorized, 14,613,464 shares and 14,478,878 shares issued, respectively, and 14,292,866 shares and 14,215,169 shares outstanding, respectively) (1)	0		0
Additional paid-in capital	1,579,342		1,578,315
Accumulated deficit	(917,689)		(907,727)
Common shares held in treasury at cost, 320,598 and 263,709 shares, respectively	(8,050)		(6,930)
Accumulated other comprehensive loss	(350,606)		(348,989)
Total Civeo Corporation shareholders’ equity	363,491		374,685
Noncontrolling interest	648		672
Total shareholders’ equity	364,139		375,357
Total liabilities and shareholders’ equity	$	710,178	$	740,853

June 30, 2020 December 31, 2019
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 7,311 $ 3,331
Accounts receivable, net 85,553 99,493
Inventories 7,683 5,877
Prepaid expenses 7,482 7,247
Other current assets 9,910 7,904
Assets held for sale — 7,589
Total current assets 117,939 131,441
Property, plant and equipment, net 486,815 590,309
Goodwill 7,778 110,173
Other intangible assets, net 100,423 111,837
Operating lease right-of-use assets 21,065 24,876
Other noncurrent assets 563 1,276
Total assets $ 734,583 $ 969,912
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 35,168 $ 36,971
Accrued liabilities 16,910 21,755
Income taxes 571 328
Current portion of long-term debt 33,510 35,080
Deferred revenue 7,853 7,165
Other current liabilities 5,484 8,741
Total current liabilities 99,496 110,040
Long-term debt, less current maturities 264,522 321,792
Deferred income taxes — 9,452
Operating lease liabilities 18,541 21,231
Other noncurrent liabilities 17,781 16,592
Total liabilities 400,340 479,107
Commitments and contingencies (Note 11)
Shareholders’ Equity:
Preferred shares (Class A Series 1, 0 par value; 50,000,000 shares authorized, 9,042, shares issued and outstanding, respectively; aggregate liquidation preference of $94,566 and $93,627 as of June 30, 2020 and December 31, 2019) 59,068 58,129
Common shares (0 par value; 550,000,000 shares authorized, 173,742,579 shares and 171,656,039 shares issued, respectively, and 170,578,068 shares and 169,556,403 shares outstanding, respectively) — —
Additional paid-in capital 1,575,788 1,572,249
Accumulated deficit (911,992) (771,590)
Common shares held in treasury at cost, 3,164,511 and 2,099,636 shares, respectively (6,930) (5,472)
Accumulated other comprehensive loss (382,315) (363,173)
Total Civeo Corporation shareholders’ equity 333,619 490,143
Noncontrolling interest 624 662
Total shareholders’ equity 334,243 490,805
Total liabilities and shareholders’ equity $ 734,583 $ 969,912
(1)Reflects our 1-for-12 reverse share split that became effective November 19, 2020. See Note 1 - Description of Business and Basis of Presentation to the notes to the unaudited consolidated financial statements included in Item 1 of this quarterly report for further discussion.

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

CIVEO CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF

CHANGES IN SHAREHOLDERS’ EQUITY

(In Thousands)


		Attributable to Civeo																											Attributable to Civeo
		Preferred Shares		Common Shares															Preferred Shares		Common Shares
		Amount		Par Value		Additional Paid-in Capital		Accumulated Deficit		Treasury Shares		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interest		Total Shareholders’ Equity			Amount		Par Value		Additional Paid-in Capital		Accumulated Deficit		Treasury Shares		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interest		Total Shareholders’ Equity
Balance, March 31, 2019		$	56,739	$	—	$	1,564,667	$	(728,748)	$	(5,471)	$	(365,870)	$	—	$	521,317
Net income (loss)		—		—		—		(14,849)		—		—		—		(14,849)
Currency translation adjustment		—		—		—		—		—		1,084		—		1,084
Dividends paid		—		—		—		—		—		—		—		—
Issuance of shares for acquisitions		—		—		—		—		—		—		—		—
Dividends attributable to Class A preferred shares		461		—		—		(461)		—		—		—		—
Share-based compensation		—		—		2,495		—		(1)		—		—		2,494
Balance, June 30, 2019		$	57,200	$	—	$	1,567,162	$	(744,058)	$	(5,472)	$	(364,786)	$	—	$	510,046

Balance, March 31, 2020		$	58,597	$	—	$	1,574,457	$	(918,128)	$	(6,914)	$	(411,619)	$	552	$	296,945
Net income (loss)		—		—		—		6,607		—		—		222		6,829
Currency translation adjustment		—		—		—		—		—		29,304		81		29,385
Dividends paid		—		—		—		—		—		—		(231)		(231)
Dividends attributable to Class A preferred shares		471		—		—		(471)		—		—		—		—
Share-based compensation		—		—		1,331		—		(16)		—		—		1,315
Balance, June 30, 2020		$	59,068	$	—	$	1,575,788	$	(911,992)	$	(6,930)	$	(382,315)	$	624	$	334,243

Balance, December 31, 2018		$	56,280	$	—	$	1,562,133	$	(710,551)	$	(1,189)	$	(371,249)	$	—	$	535,424
Net income (loss)		—		—		—		(31,888)		—		—		—		(31,888)
Currency translation adjustment		—		—		—		—		—		6,463		—		6,463
Dividends paid		—		—		—		—		—		—		—		—
Cumulative effect of implementation of ASU 2014-09		—		—		—		(699)		—		—		—		(699)
Dividends attributable to Class A preferred shares		920		—		—		(920)		—		—		—		—
Share-based compensation		—		—		5,029		—		(4,283)		—		—		746
Balance, June 30, 2019		$	57,200	$	—	$	1,567,162	$	(744,058)	$	(5,472)	$	(364,786)	$	—	$	510,046

Balance, December 31, 2019	Balance, December 31, 2019	$	58,129	$	—	$	1,572,249	$	(771,590)	$	(5,472)	$	(363,173)	$	662	$	490,805	Balance, December 31, 2019	$	58,129	$	—	$	1,572,249	$	(771,590)	$	(5,472)	$	(363,173)	$	662	$	490,805
Net income (loss)	Net income (loss)	—		—		—		(139,463)		—		—		480		(138,983)		Net income (loss)	—		—		—		(146,070)		—		—		258		(145,812)
Currency translation adjustment	Currency translation adjustment	—		—		—		—		—		(19,142)		(14)		(19,156)		Currency translation adjustment	—		—		—		—		—		(48,446)		(95)		(48,541)
Dividends paid	Dividends paid	—		—		—		—		—		—		(504)		(504)		Dividends paid	—		—		—		—		—		—		(273)		(273)
Dividends attributable to Class A preferred shares	Dividends attributable to Class A preferred shares	939		—		—		(939)		—		—		—		—		Dividends attributable to Class A preferred shares	468		—		—		(468)		—		—		—		—
Share-based compensation	Share-based compensation	—		—		3,539		—		(1,458)		—		—		2,081		Share-based compensation	—		—		2,208		—		(1,442)		—		—		766
Balance, June 30, 2020		$	59,068	$	—	$	1,575,788	$	(911,992)	$	(6,930)	$	(382,315)	$	624	$	334,243
Balance, March 31, 2020																		Balance, March 31, 2020	$	58,597	$	—	$	1,574,457	$	(918,128)	$	(6,914)	$	(411,619)	$	552	$	296,945

Balance, December 31, 2020																		Balance, December 31, 2020	$	60,016	$	—	$	1,578,315	$	(907,727)	$	(6,930)	$	(348,989)	$	672	$	375,357
Net income (loss)																		Net income (loss)	—		—		—		(9,484)		—		—		59		(9,425)
Currency translation adjustment																		Currency translation adjustment	—		—		—		—		—		(1,617)		(10)		(1,627)
Dividends paid																		Dividends paid	—		—		—		—		—		—		(73)		(73)
Dividends attributable to Class A preferred shares																		Dividends attributable to Class A preferred shares	478		—		—		(478)		—		—		—		—
Share-based compensation																		Share-based compensation	—		—		1,027		—		(1,120)		—		—		(93)
Balance, March 31, 2021																		Balance, March 31, 2021	$	60,494	$	—	$	1,579,342	$	(917,689)	$	(8,050)	$	(350,606)	$	648	$	364,139

Preferred
Shares (in
thousands) Common
Shares (in
thousands)
Balance, December 31, 2019 9,042 169,556
Stock-based compensation — 1,022
Balance, June 30, 2020 9,042 170,578


	Preferred Shares	Common Shares (in thousands)(1)
Balance, December 31, 2020	9,042	14,215
Share-based compensation	0	78
Balance, March 31, 2021	9,042	14,293

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

CIVEO CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)


		Six Months Ended June 30,							Three Months Ended March 31,
		2020		2019			2021		2020
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net loss	Net loss	$	(138,983)	$	(31,888)	Net loss	$	(9,425)	$	(145,812)
Adjustments to reconcile net loss to net cash provided by operating activities:	Adjustments to reconcile net loss to net cash provided by operating activities:					Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	47,707		61,778		Depreciation and amortization	21,269		25,502
Impairment charges	Impairment charges	144,120		5,546		Impairment charges	0		144,120

Deferred income tax benefit		(8,941)		(7,855)
Deferred income tax expense (benefit)						Deferred income tax expense (benefit)	1,041		(8,941)
Non-cash compensation charge	Non-cash compensation charge	3,539		5,029		Non-cash compensation charge	1,027		2,208
Gains on disposals of assets	Gains on disposals of assets	(1,819)		(1,371)		Gains on disposals of assets	(1,902)		(21)
Provision (benefit) for loss on receivables, net of recoveries		25		(56)
Provision for credit losses, net of recoveries						Provision for credit losses, net of recoveries	193		54
Other, net	Other, net	(3,240)		1,444		Other, net	716		693
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	10,231		(18,616)		Accounts receivable	1,806		(1,496)
Inventories	Inventories	(1,895)		(3)		Inventories	(526)		(740)
Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	(4,583)		135		Accounts payable and accrued liabilities	(5,287)		6,280
Taxes payable	Taxes payable	251		244		Taxes payable	51		133
Other current and noncurrent assets and liabilities, net	Other current and noncurrent assets and liabilities, net	(1,094)		(4,427)		Other current and noncurrent assets and liabilities, net	3,854		(1,143)
Net cash flows provided by operating activities	Net cash flows provided by operating activities	45,318		9,960		Net cash flows provided by operating activities	12,817		20,837

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(3,847)		(21,208)		Capital expenditures	(3,372)		(2,651)

Proceeds from disposition of property, plant and equipment	Proceeds from disposition of property, plant and equipment	1,897		4,448		Proceeds from disposition of property, plant and equipment	6,651		72
Other, net		4,619		1,762

Net cash flows provided by (used in) investing activities	Net cash flows provided by (used in) investing activities	2,669		(14,998)		Net cash flows provided by (used in) investing activities	3,279		(2,579)

Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Revolving credit borrowings	Revolving credit borrowings	122,320		135,862		Revolving credit borrowings	78,628		74,287
Revolving credit repayments	Revolving credit repayments	(147,950)		(108,108)		Revolving credit repayments	(85,319)		(80,367)
Term loan repayments	Term loan repayments	(16,551)		(17,398)		Term loan repayments	(8,872)		(8,109)

Taxes paid on vested shares	Taxes paid on vested shares	(1,458)		(4,283)		Taxes paid on vested shares	(1,120)		(1,442)
Net cash flows provided by (used in) financing activities		(43,639)		6,073
Net cash flows used in financing activities						Net cash flows used in financing activities	(16,683)		(15,631)

Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(368)		52		Effect of exchange rate changes on cash	(113)		(400)
Net change in cash and cash equivalents	Net change in cash and cash equivalents	3,980		1,087		Net change in cash and cash equivalents	(700)		2,227
Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period	3,331		12,372		Cash and cash equivalents, beginning of period	6,155		3,331

Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	7,311	$	13,459	Cash and cash equivalents, end of period	$	5,455	$	5,558

Non-cash financing activities:	Non-cash financing activities:					Non-cash financing activities:
Preferred dividends paid-in-kind	Preferred dividends paid-in-kind	$	939	$	920	Preferred dividends paid-in-kind	$	478	$	468

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

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

1.DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of the Business

We ~~are a~~provide hospitality ~~company servicing~~services to the natural resources industry in Canada, Australia and the U.S. We provide a full suite of hospitality services for our guests, including lodging, catering and food service, housekeeping and maintenance at accommodation facilities that we or our customers own. In many cases, we provide services that support the day-to-day operations of accommodation facilities, such as laundry, facility management and maintenance, water and wastewater treatment, power generation, communication systems, security and logistics. We also offer development activities for workforce accommodation facilities, including site selection, permitting, engineering and design, manufacturing management and site construction, along with providing hospitality services once the facility is constructed. We primarily operate in some of the world’s most active oil, metallurgical (met) coal, liquefied natural gas (LNG) and iron ore producing regions, and our customers include major and independent oil ~~and gas~~ companies, mining companies, engineering companies and oilfield and mining service companies. We operate in 3 principal reportable business segments – Canada, Australia and the U.S.

Reverse Share Split

On November 19, 2020, we effected a reverse share split where each twelve issued and outstanding common shares were

converted into one common share. Our common shares began trading on a reverse share split adjusted basis on November 19, 2020. A total of 14,215,169 common shares were issued and outstanding immediately after the reverse share split. No fractional shares were outstanding following the reverse share split. In lieu of any fractional share, the aggregate number of common shares that a holder was entitled to was, if the fraction was less than half a common share, rounded down to the next closest whole number of common shares, and if the fraction was at least half of a common share, rounded up to one whole common share.

The reverse share split did not affect the number of authorized or issued and outstanding shares of our preferred shares. As a result of the reverse share split, the conversion price for the Company’s outstanding Class A Series 1 preferred shares (Series A preferred shares) was automatically increased to $39.60 for each Series A preferred share (previously it was $3.30 per Series A preferred share).

All authorized, issued and outstanding shares and per share amounts contained in the accompanying consolidated financial statements have been adjusted to reflect this reverse share split for all prior periods presented.

Basis of Presentation

Unless otherwise stated or the context otherwise indicates: (i) all references in these consolidated financial statements to “Civeo,” “us,” “our” or “we” refer to Civeo Corporation and its consolidated subsidiaries; and (ii) all references in this report to “dollars” or “$” are to U.S. dollars.

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

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

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

The financial statements included in this report should be read in conjunction with our audited financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

2.RECENT ACCOUNTING PRONOUNCEMENTS

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

In ~~June 2016,~~December 2019, the FASB issued Accounting Standards Update (ASU) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in ASU ~~2016-13, “Financial Instruments – Credit Losses” (ASU 2016-13). This new standard changes how companies measure credit losses for most financial assets~~2019-12 remove certain exceptions to the general principles in Accounting Standards Codification Topic 740. The amendments also clarify and ~~certain other instruments that~~amend existing guidance to improve consistent application. The amendments are ~~not measured at fair value through net income. ASU 2016-13 is~~ effective for financial statements issued for reporting periods beginning after December 15, ~~2019~~2020 and interim periods within the reporting periods. The transition method (retrospective, modified retrospective or prospective basis) related to the amendments depends on the applicable guidance, and all amendments for which there is no transition guidance specified are to be applied on a prospective basis. We adopted ASU ~~2016-13 as of~~2019-12 on January 1, ~~2020.~~2021 and have applied the prospective basis. The adoption of this new standard did not have ~~a material~~an impact on our consolidated financial statements.

~~CIVEO CORPORATION~~

~~NOTES TO UNAUDITED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(Continued)~~

3.REVENUE

The following table disaggregates our revenue by our 3 reportable segments: Canada, Australia and the U.S., and major categories for the periods indicated (in thousands):


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020
Canada	Canada									Canada
Accommodation revenues	Accommodation revenues	$	40,204	$	66,183	$	106,270	$	123,835	Accommodation revenues	$	46,530	$	66,066
Mobile facility rental revenues	Mobile facility rental revenues	6,072		1,819		8,580		2,600		Mobile facility rental revenues	10,499		2,508
Food service and other services revenues	Food service and other services revenues	6,710		9,086		17,484		17,423		Food service and other services revenues	4,856		10,774
Manufacturing revenues		—		1,014		—		1,014

Total Canada revenues	Total Canada revenues	52,986		78,102		132,334		144,872		Total Canada revenues	61,885		79,348

Australia	Australia									Australia
Accommodation revenues	Accommodation revenues	$	34,933	$	30,996	$	67,518	$	59,417	Accommodation revenues	$	33,675	$	32,585
Food service and other services revenues	Food service and other services revenues	22,138		—		38,666		—		Food service and other services revenues	25,962		16,528
Total Australia revenues	Total Australia revenues	57,071		30,996		106,184		59,417		Total Australia revenues	59,637		49,113

U.S.	U.S.									U.S.
Accommodation revenues	Accommodation revenues	$	242	$	4,775	$	1,498	$	9,699	Accommodation revenues	$	772	$	1,256
Mobile facility rental revenues	Mobile facility rental revenues	3,870		7,626		10,057		14,223		Mobile facility rental revenues	3,067		6,187
Manufacturing revenues	Manufacturing revenues	524		607		3,387		2,402		Manufacturing revenues	63		2,863
Food service and other services revenues	Food service and other services revenues	9		47		34		90		Food service and other services revenues	6		25
Total U.S. revenues	Total U.S. revenues	4,645		13,055		14,976		26,414		Total U.S. revenues	3,908		10,331

Total revenues	Total revenues	$	114,702	$	122,153	$	253,494	$	230,703	Total revenues	$	125,430	$	138,792

Our payment terms vary by the type and location of our customer and the products or services offered. The term between invoicing and when our performance obligations are satisfied is not significant. Payment terms are generally within 30 ~~days.~~days and do not extend beyond 60 days, unless otherwise agreed to. We do not have significant financing components or significant payment terms.

As of ~~June 30, 2020,~~March 31, 2021, for contracts that are greater than one year, the table below discloses the estimated revenues related to performance obligations that are unsatisfied (or partially unsatisfied) and when we expect to recognize the revenue. The table only includes revenue expected to be recognized from contracts where the quantity of service is certain (in thousands):

For the years ending December 31,
2020 2021 2022 Thereafter Total
Revenue expected to be recognized as of June 30, 2020 $ 65,883 $ 60,430 $ 29,470 $ 11,762 $ 167,545

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)


	For the years ending December 31,
	2021		2022		2023		Thereafter		Total
Revenue expected to be recognized as of March 31, 2021	$	85,246	$	79,365	$	16,194	$	1,992	$	182,797

We applied the practical expedient and do not disclose consideration for remaining performance obligations with an original expected duration of one year or less. In addition, we do not estimate revenues expected to be recognized related to unsatisfied performance obligations for contracts without minimum room commitments. The table above represents only a portion of our expected future consolidated revenues and it is not necessarily indicative of the expected trend in total revenues.

4.FAIR VALUE MEASUREMENTS

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

As of ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, we believe the carrying value of our floating-rate debt outstanding under our term loans and revolving credit facilities approximates fair value because the terms include short-term interest rates and exclude penalties for prepayment. We estimated the fair value of our floating-rate term loan and revolving credit facilities using significant other observable inputs, representative of a Level 2 fair value measurement, including terms and credit spreads for these loans.

During ~~our~~the first quarter of 2020, ~~and the second and fourth quarter of 2019,~~ we ~~wrote down certain long-lived assets to fair value. We also~~ recorded goodwill impairment charges related to one of our reporting ~~units during the first quarter of 2020 and one of our reporting units during the fourth quarter of 2019.~~units. Our estimates of fair value required us to use significant unobservable inputs, representative of Level 3 fair value measurements, including numerous assumptions with respect to future

~~CIVEO CORPORATION~~

~~NOTES TO UNAUDITED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(Continued)~~

circumstances that might directly impact each of the relevant asset groups’ operations in the future and are therefore uncertain. We estimated the fair value when conducting the goodwill impairment and long-lived asset impairment tests primarily using an income approach. The discount rates used to value our reporting units for the interim goodwill impairment test, as well as the Canadian and U.S. segments long-lived asset impairment analysis ranged between 10.5% and 14.0%. These assumptions with respect to future circumstances included future cash flows, oil, met coal and natural gas prices, anticipated spending by our customers, the cost of capital, and industry and/or local market conditions. We estimated the fair value when conducting the goodwill impairment test primarily using an income approach. The discount rates used to value our reporting units for the goodwill impairment test ranged between 10.5% and 14.0%.

During the ~~fourth~~first quarter of ~~2019, our estimate of~~2020, we wrote down certain long-lived assets to fair value. We estimated the fair value when conducting the long-lived asset impairment tests primarily using an income approach. We used a variety of ~~corporate office space in Canada~~unobservable inputs and ~~during the second quarter~~underlying assumptions consistent with those discussed above for purposes of ~~2019,~~ our ~~estimate of fair~~goodwill impairment test. The discount rates used to value ~~of land in Australia, were based on appraisals from third parties.~~ our Canadian and U.S. segments long-lived asset impairment analysis ranged between 11.0% and 14.0%.

See Note 6 – Impairment Charges ~~for further information.~~

During the third quarter of 2019, we acquired Action Industrial Catering (Action) and recorded the assets acquired and liabilities assumed at fair value. Determining the fair value of these assets and liabilities required the exercise of significant judgment, including the amount and timing of expected future cash flows, long-term growth rates and discount rates. The cash flows employed in the valuation are based on our best estimates of future sales, earnings and cash flows after considering factors such as general market conditions, expected future customer orders, contracts with suppliers, labor costs, changes in working capital, long term business plans and recent operating performance. See Note 7 – Acquisitions for further information.

5.DETAILS OF SELECTED BALANCE SHEET ACCOUNTS

Additional information regarding selected balance sheet accounts at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 is presented below (in thousands):


		June 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
Accounts receivable, net:	Accounts receivable, net:					Accounts receivable, net:
Trade	Trade	$	62,603	$	76,370	Trade	$	60,116	$	66,071
Unbilled revenue	Unbilled revenue	18,761		23,041		Unbilled revenue	26,122		22,565
Other (1)	Other (1)	4,432		335		Other (1)	2,003		1,421
Total accounts receivable	Total accounts receivable	85,796		99,746		Total accounts receivable	88,241		90,057
Allowance for credit losses	Allowance for credit losses	(243)		(253)		Allowance for credit losses	(458)		(275)
Total accounts receivable, net	Total accounts receivable, net	$	85,553	$	99,493	Total accounts receivable, net	$	87,783	$	89,782

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

(1)As of ~~June 30,~~March 31, 2021 and December 31, 2020, Other accounts receivable ~~includes~~included a ~~$4.4~~$1.7 million and $1.1 million receivable, respectively, related to the Canada Emergency Wage Subsidy (CEWS), a subsidy implemented by the Canadian government in response to the COVID-19 pandemic. Other income ~~in the second quarter of 2020 includes $6.2 million of income~~ related to the ~~CEWS.~~CEWS during the three months ended March 31, 2021 and 2020 was $2.8 million and 0, respectively.


		June 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
Inventories:	Inventories:					Inventories:
Finished goods and purchased products	Finished goods and purchased products	$	4,487	$	3,982	Finished goods and purchased products	$	4,944	$	5,047
Work in process	Work in process	2,019		813		Work in process	559		45
Raw materials	Raw materials	1,177		1,082		Raw materials	1,174		1,089
Total inventories	Total inventories	$	7,683	$	5,877	Total inventories	$	6,677	$	6,181

~~CIVEO CORPORATION~~

~~NOTES TO UNAUDITED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(Continued)~~


	Estimated Useful Life (in years)			March 31, 2021		December 31, 2020
Property, plant and equipment, net:
Land				$	47,506	$	47,751
Accommodations assets	3	—	15	1,723,838		1,737,620
Buildings and leasehold improvements	7	—	20	28,840		28,831
Machinery and equipment	4	—	15	13,183		12,784
Office furniture and equipment	3	—	7	63,662		61,850
Vehicles	3	—	5	14,450		15,363
Construction in progress				4,844		5,523
Total property, plant and equipment				1,896,323		1,909,722
Accumulated depreciation				(1,427,362)		(1,422,792)
Total property, plant and equipment, net				$	468,961	$	486,930

Estimated
Useful Life
(in years) June 30, 2020 December 31, 2019
Property, plant and equipment, net:
Land $ 45,816 $ 43,147
Accommodations assets 3 — 15 1,617,979 1,696,425
Buildings and leasehold improvements 7 — 20 32,884 26,108
Machinery and equipment 4 — 15 11,905 12,060
Office furniture and equipment 3 — 7 57,489 58,005
Vehicles 3 — 5 14,448 14,604
Construction in progress 4,841 4,286
Total property, plant and equipment 1,785,362 1,854,635
Accumulated depreciation (1,298,547) (1,264,326)
Total property, plant and equipment, net $ 486,815 $ 590,309

~~During the second quarter~~As of December 31, 2020, ~~we reclassified $6.6 million of~~ assets held for sale ~~back into property,~~included $3.9 million related to our modular construction and manufacturing plant ~~and equipment due to no longer meeting~~near Edmonton, Alberta, Canada. During the ~~accounting requirements.~~first quarter 2021, the manufacturing facility was sold.


		June 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
Accrued liabilities:	Accrued liabilities:					Accrued liabilities:
Accrued compensation	Accrued compensation	$	12,838	$	17,169	Accrued compensation	$	16,629	$	22,475
Accrued taxes, other than income taxes	Accrued taxes, other than income taxes	2,876		3,152		Accrued taxes, other than income taxes	2,701		3,099

Other	Other	1,196		1,434		Other	1,471		1,775
Total accrued liabilities	Total accrued liabilities	$	16,910	$	21,755	Total accrued liabilities	$	20,801	$	27,349

6.IMPAIRMENT CHARGES

Quarter ended March 31, 2020. During the first quarter of 2020, we recorded impairment expense related to goodwill and long-lived assets.

The spread of the COVID-19 coronavirus (COVID-19) and the response thereto during the first quarter of 2020 negatively impacted the global economy. The resulting unprecedented decline in oil demand, coupled with disagreements between Saudi Arabia and Russia about production limits, resulted in a collapse of global oil prices in March 2020, thereby creating unprecedented downward pressure on stock prices in the energy industry, particularly small-cap companies with operations in the U.S. and Canada, such as Civeo. As a result, we experienced a sustained reduction of our share price during the first quarter of 2020. Our market capitalization implied an enterprise value which was significantly less than the sum of the estimated fair values of our reporting units, and we determined that an indicator of a goodwill impairment was present as of March 31, 2020. Accordingly, we performed an interim goodwill impairment test as of March 31, 2020, and the carrying amount of our Canadian reporting unit exceeded the reporting unit's fair value. Based on the results of the impairment test, we reduced the value of our goodwill in our Canadian reporting unit to 0 and recognized impairment expense in the first quarter of 2020 of $93.6 million.

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

Furthermore, as a result of the decline in global oil prices and forecasts for a potentially protracted period of lower prices, as well as the goodwill impairment in our Canadian segment, we determined all asset groups within this segment had experienced a trigger that indicated that the carrying values might not be recoverable. Accordingly, we assessed the carrying value of each asset group to determine if it continued to be recoverable based on estimated future cash flows. Based on the assessment, the carrying values of certain asset groups were determined to not be fully recoverable, and we proceeded to compare the estimated fair value of these asset groups to their respective carrying values. As a result, certain asset groups were written down to their estimated fair values of $43.5 million and we recorded impairment expense of $38.1 million related to certain long-lived assets in our Canadian segment.

Also, as a result of the decline in global oil prices and forecasts for a potentially protracted period of lower prices, we reviewed all asset groups in our U.S. segment to determine if an indicator of impairment had occurred that would indicate that the carrying values of the asset groups in the segment might not be recoverable. We determined that certain asset groups within the segment had experienced an indicator of impairment, and thus we assessed the carrying values of our long-lived assets in

the U.S. to determine if they continued to be recoverable based on estimated future cash flows. Based on the assessment, the carrying values of certain of our U.S. asset groups were determined to not be recoverable, and we proceeded to compare the estimated fair values of the asset groups to their respective carrying values. Accordingly, these assets were written down to their estimated fair values of $12.5 million. We recorded impairment expense of $12.4 million during the first quarter of 2020 related to our U.S. segment.

~~Quarter ended June 30, 2019~~. During the second quarter of 2019, we identified indicators that certain long-lived assets in Australia may be impaired due to market developments, including the non-renewal of certain land development approval agreements. We assessed the carrying values of the related assets to determine if they continued to be recoverable based on estimated future cash flows. Based on the assessment, the carrying values were determined to not be fully recoverable, and we proceeded to compare the estimated fair value of the assets to their respective carrying values. Accordingly, the assets were written down to their estimated fair values of $0.5 million. As a result of the analysis described above, we recorded an impairment expense of $4.5 million.

Additionally, during the second quarter of 2019, we identified a liability related to an asset retirement obligation (ARO) at one of our villages in Australia that should have been recorded in 2011. We determined that the error was not material to our previously issued financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018, and therefore, corrected the error in the second quarter of 2019. Specifically, we recorded the following amounts in our second quarter 2019 unaudited consolidated statement of operations related to prior periods: (1) additional accretion expense related to the ARO of $0.9 million, (2) additional depreciation and amortization expense of $0.5 million related to amortization of the related asset retirement cost and (3) additional impairment expense related to the impairment of the asset retirement cost of $1.0 million offset by recognition of an ARO liability totaling $2.3 million as of June 30, 2019.

7.~~ACQUISITIONS~~

~~Action~~

On July 1, 2019, we acquired Action, a provider of catering and managed services to the mining industry in Western Australia. We funded the purchase price of $16.9 million in cash through a combination of cash on hand and borrowings under our revolving credit facility. Action's operations are reported as part of our Australia reporting business segment beginning on July 1, 2019, the date of acquisition.

This acquisition was accounted for in accordance with the acquisition method of accounting for business combinations, which required us to record the assets acquired and the liabilities assumed at their fair values at July 1, 2019. Our estimates of the fair value for such assets and liabilities required significant assumptions and judgment. Based on the final purchase price allocation, intangible assets acquired totaled $8.4 million and consisted primarily of customer contracts and a trade name. In addition, we recognized goodwill of $7.9 million.

~~Noralta~~

On April 2, 2018, we acquired Noralta Lodge Ltd. (Noralta). During the second quarter of 2020, $5.0 million in cash was released to us from escrow to cover certain agreed upon indemnification claims. As a result of this settlement, we recorded $4.7 million in Other income in the accompanying unaudited consolidated statements of operations for the three and six months ended June 30, 2020.

~~CIVEO CORPORATION~~

~~NOTES TO UNAUDITED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(Continued)~~

8.EARNINGS PER SHARE

As previously disclosed in Note 1 - Description of Business and Basis of Presentation, a 1-for-12 reverse share split became effective on November 19, 2020 for all authorized, issued and outstanding shares of Civeo common shares. Accordingly, all share and per share amounts have been adjusted to reflect this reverse stock split for all prior periods presented.

We calculate basic and diluted earnings per share by applying the two-class method because we have participating securities in the form of Class A preferred shares. Participating securities are allocated a proportional share of net income determined by dividing total weighted average participating securities by the sum of total weighted average common shares and participating securities. We also apply the treasury stock method with respect to certain share-based awards in the calculation of diluted earnings per share, if dilutive.

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

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


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020
Numerator:	Numerator:									Numerator:
Net income (loss) attributable to Civeo common shareholders		$	6,136	$	(15,310)	$	(140,402)	$	(32,808)
Net loss attributable to Civeo common shareholders										Net loss attributable to Civeo common shareholders	$	(9,962)	$	(146,538)
Less: income allocated to participating securities	Less: income allocated to participating securities	(886)		—		—		—		Less: income allocated to participating securities	0		0
Basic net income (loss) attributable to Civeo Corporation common shareholders		$	5,250	$	(15,310)	$	(140,402)	$	(32,808)
Basic net loss attributable to Civeo Corporation common shareholders										Basic net loss attributable to Civeo Corporation common shareholders	$	(9,962)	$	(146,538)
Add: undistributed income attributable to participating securities	Add: undistributed income attributable to participating securities	886		—		—		—		Add: undistributed income attributable to participating securities	0		0
Less: undistributed income reallocated to participating securities	Less: undistributed income reallocated to participating securities	(885)		—		—		—		Less: undistributed income reallocated to participating securities	0		0
Diluted net income (loss) attributable to Civeo Corporation common shareholders		$	5,251	$	(15,310)	$	(140,402)	$	(32,808)
Diluted net loss attributable to Civeo Corporation common shareholders										Diluted net loss attributable to Civeo Corporation common shareholders	$	(9,962)	$	(146,538)

Denominator:	Denominator:									Denominator:
Weighted average shares outstanding - basic	Weighted average shares outstanding - basic	169,812		167,532		169,165		166,437		Weighted average shares outstanding - basic	14,211		14,043
Dilutive shares - share-based awards	Dilutive shares - share-based awards	178		—		—		—		Dilutive shares - share-based awards	0		0
Weighted average shares outstanding - diluted	Weighted average shares outstanding - diluted	169,990		167,532		169,165		166,437		Weighted average shares outstanding - diluted	14,211		14,043

Basic net income (loss) per share attributable to Civeo Corporation common shareholders (1)		$	0.03	$	(0.09)	$	(0.83)	$	(0.20)
Basic net loss per share attributable to Civeo Corporation common shareholders (1)										Basic net loss per share attributable to Civeo Corporation common shareholders (1)	$	(0.70)	$	(10.43)

Diluted net income (loss) per share attributable to Civeo Corporation common shareholders (1)		$	0.03	$	(0.09)	$	(0.83)	$	(0.20)
Diluted net loss per share attributable to Civeo Corporation common shareholders (1)										Diluted net loss per share attributable to Civeo Corporation common shareholders (1)	$	(0.70)	$	(10.43)

(1)Computations may reflect rounding adjustments.

For the three months ended ~~June 30,~~March 31, 2021 and 2020, we excluded ~~3.7~~0.2 million ~~share based~~and 0.5 million share-based awards, respectively, from the computation of diluted earnings per share because their effect was anti-dilutive. When an entity has a net loss from continuing operations, it is prohibited from including potential common shares in the computation of diluted per share amounts. ~~For~~Additionally, for the three months ended ~~June 30, 2019~~March 31, 2021 and ~~the six months ended June 30,~~ 2020, and 2019, we excluded from the computation of diluted loss per share 6.6 million, 5.0 million and 7.5 million share-based awards, respectively, since the effect would have been anti-dilutive. Additionally, for the three and six months ended June 30, 2020 and 2019, we excluded from the computation the impact of converting the Preferred Shares into ~~28.7~~2.4 million and ~~28.1~~2.4 million common shares, respectively, since the effect would have been anti-dilutive.

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

9.8.DEBT

As of ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, long-term debt consisted of the following (in thousands):

June 30, 2020 December 31, 2019
Canadian term loan, which matures on November 30, 2021; 3.125% of aggregate principal repayable per quarter; weighted average interest rate of 4.4% for the six-month period ended June 30, 2020 (1)
$ 197,532 $ 224,963
U.S. revolving credit facility, which matures on November 30, 2021), weighted average interest rate of 7.0% for the six-month period ended June 30, 2020 (1)

— —
Canadian revolving credit facility, which matures on November 30, 2021, weighted average interest rate of 4.5% for the six-month period ended June 30, 2020 (1)

101,998 134,117
Australian revolving credit facility, which matures on November 30, 2021, weighted average interest rate of 4.2% for the six-month period ended June 30, 2020 (1)

— —
299,530 359,080
Less: Unamortized debt issuance costs 1,498 2,208
Total debt 298,032 356,872
Less: Current portion of long-term debt, including unamortized debt issuance costs, net 33,510 35,080
Long-term debt, less current maturities $ 264,522 $ 321,792

~~(1)~~As of June 30, 2020, one lender had an outstanding Canadian term loan of $5.9 million and an outstanding Canadian revolver loan of $8.7 million that matures on November 30, 2020. Another lender had an outstanding Canadian revolver loan of $12.5 million that matures on November 30, 2020.

Maturities in 2020 are not classified as current as of June 30, 2020 and December 31, 2019, since we are able, and have the intent, to repay the outstanding 2020 maturities by borrowing amounts equal to such maturities under our existing revolving credit facility, which matures on November 30, 2021. We did not have any capitalized interest to net against interest expense for the three and six months ended June 30, 2020 or 2019.


	March 31, 2021		December 31, 2020
Canadian term loan, which matures on May 30, 2023; C$11.2 million principal repayable per quarter; weighted average interest rate of 4.0% for the three month period ended March 31, 2021	$	180,997	$	187,530

U.S. revolving credit facility, which matures on May 30, 2023; weighted average interest rate of 5.8% for the three month period ended March 31, 2021	0		0

Canadian revolving credit facility, which matures on May 30, 2023; weighted average interest rate of 4.5% for the three month period ended March 31, 2021	40,317		45,789

Australian revolving credit facility, which matures on May 30, 2023; weighted average interest rate of 3.6% for the three month period ended March 31, 2021	16,746		17,767
	238,060		251,086
Less: Unamortized debt issuance costs	2,257		2,501
Total debt	235,803		248,585
Less: Current portion of long-term debt, including unamortized debt issuance costs, net	35,047		34,585
Long-term debt, less current maturities	$	200,756	$	214,000

Credit Agreement

As of ~~June 30, 2020,~~March 31, 2021, our Credit Agreement (as then amended to date, the Credit Agreement), provided for: (i) a ~~$263.5~~$167.3 million revolving credit facility scheduled to mature on ~~November~~May 30, ~~2021 for certain lenders,~~2023, allocated as follows: (A) a ~~$20.0~~$10.0 million senior secured revolving credit facility in favor of certain of our U.S. subsidiaries, as borrowers; (B) a ~~$183.5~~$122.3 million senior secured revolving credit facility in favor of Civeo and certain of our Canadian subsidiaries, as borrowers; and (C) a ~~$60.0~~$35.0 million senior secured revolving credit facility in favor of one of our Australian subsidiaries, as borrower; and (ii) a ~~$285.4~~$194.8 million term loan facility scheduled to mature on ~~November~~May 30, ~~2021~~2023 for certain lenders in favor of Civeo.

We are required to maintain, if a qualified offering of indebtedness with gross proceeds in excess of $150 million has been consummated, a maximum leverage ratio of 4.00 to 1.00 and, if such qualified offering has not been consummated, a maximum leverage ratio not to exceed the ratios set forth in the following table:


~~Period Ended~~	~~Maximum Leverage Ratio~~
~~June 30, 2020 & September 30, 2020~~	~~3.75 :~~	~~1.00~~
~~December 31, 2020 and thereafter~~	~~3.50 :~~	~~1.00~~

~~CIVEO CORPORATION~~

~~NOTES TO UNAUDITED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(Continued)~~

amounts outstanding bear interest at a variable rate equal to a ~~B/A~~Bankers’ Acceptance Discount Rate (as defined in the Credit Agreement) based on the Canadian Dollar Offered Rate (CDOR) plus a margin of ~~2.25%~~3.50% to ~~4.00%~~4.50%, or a Canadian Prime rate plus a margin of ~~1.25%~~2.50% to ~~3.00%~~3.50%, in each case based on a ratio of our total debt to consolidated EBITDA. Australian dollar amounts outstanding under the Credit Agreement bear interest at a variable rate equal to the Bank Bill Swap Bid Rate plus a margin of ~~2.25%~~3.50% to ~~4.00%~~4.50%, based on a ratio of our total debt to consolidated EBITDA. The future transitions from LIBOR and CDOR as interest rate benchmarks is addressed in the Credit Agreement and at such time the transition from LIBOR or CDOR takes place, we will endeavor with the administrative agent to establish an alternate rate of interest to LIBOR or CDOR that gives due consideration to (1) the then prevailing market convention for determining a rate of interest for syndicated loans in the United States at such time for the replacement of LIBOR and (2) any evolving or then existing convention for similar Canadian Dollar denominated syndicated credit facilities for the replacement of CDOR.

The Credit Agreement contains customary affirmative and negative covenants that, among other things, limit or restrict: (i) indebtedness, liens and fundamental changes; (ii) asset sales; (iii) acquisitions of margin stock; (iv) specified acquisitions; (v) certain restrictive agreements; (vi) transactions with affiliates; and (vii) investments and other restricted payments, including dividends and other distributions. In addition, we must maintain an interest coverage ratio, defined as the ratio of consolidated EBITDA to consolidated interest expense, of at least ~~3.0~~3.00 to ~~1.0~~1.00 and our maximum leverage ratio, defined as the ratio of total debt to consolidated EBITDA, of no greater than ~~3.75~~3.50 to ~~1.0 (as of June 30, 2020). As noted above, the permitted maximum leverage ratio changes over time.~~1.00. Following a qualified offering of indebtedness with gross proceeds in excess of ~~$150~~$150.0 million, we will be required to maintain a maximum leverage ratio of no greater than 4.00 to 1.00 and a maximum senior secured ratio less than 2.50 to ~~1.0.~~1.00. Each of the factors considered in the calculations of these ratios are defined in the Credit Agreement. EBITDA and consolidated interest, as defined, exclude goodwill and asset impairments, debt

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

discount amortization, amortization of intangibles and other non-cash charges. We were in compliance with our covenants as of ~~June 30, 2020.~~March 31, 2021.

Borrowings under the Credit Agreement are secured by a pledge of substantially all of our assets and the assets of our ~~subsidiaries.~~subsidiaries subject to customary exceptions. The obligations under the Credit Agreement are guaranteed by our significant subsidiaries. As of ~~June 30, 2020,~~March 31, 2021, we had 108 lenders that were parties to the Credit Agreement, with total commitments (including both revolving commitments and term commitments) ranging from ~~$24.9~~$22.4 million to ~~$85.4~~$71.1 million. As of ~~June 30, 2020,~~March 31, 2021, we had outstanding letters of credit of ~~$0.3~~$1.2 million under the U.S. facility, ~~$0.5~~$0.1 million under the Australian facility and ~~$1.8~~$2.0 million under the Canadian facility.

As of March 31, 2021 and December 31, 2020, we also had 2 bank guarantee facilities totaling A$3.0 million which mature on May 31, 2021. We had bank guarantees of A$0.9 million and A$0.8 million under these facilities outstanding as of March 31, 2021 and December 31, 2020, respectively.

~~10.~~9.INCOME TAXES

Our operations are conducted through various subsidiaries in a number of countries throughout the world. We have provided for income taxes based upon the tax laws and rates in the countries in which operations are conducted and income is earned.

We operate ~~primarily~~ in three jurisdictions, Canada, Australia and the U.S., where statutory tax rates range from 21% to 30%. Our effective tax rate will vary from period to period based on changes in earnings mix between these different jurisdictions.

We compute our quarterly taxes under the effective tax rate method by applying an anticipated annual effective rate to our year-to-date income, except for significant unusual or extraordinary transactions. Income taxes for any significant and unusual or extraordinary transactions are computed and recorded in the period in which the specific transaction occurs. As of ~~June 30,~~March 31, 2021 and 2020, Canada and the U.S. were considered loss jurisdictions for tax accounting purposes and were removed from the annual effective tax rate computation for purposes of computing the interim tax provision. As

Our income tax expense for the three months ended March 31, 2021 totaled $1.1 million, or (12.9%) of ~~June 30, 2019, Australia~~pretax loss, compared to a tax benefit of $8.8 million, or 5.7% of pretax loss, for the three months ended March 31, 2020. Our effective tax rate for both the three months ended March 31, 2021 and March 31, 2020 was impacted by considering Canada and the U.S. ~~were considered~~ loss jurisdictions ~~for tax accounting purposes and~~that were removed from the annual effective tax rate computation for purposes of computing the interim tax provision.

~~Our income tax expense~~ Additionally, for the three months ended June 30, 2020 totaled $0.1 million, or 1.8% of pretax loss, compared to a benefit of $2.9 million, or 16.1% of pretax loss, for the three months ended June 30, 2019. For the three months ended June 30, 2020, we recorded a tax expense of $0.1 million related to foreign withholding taxes. Under ASC 740-270, "Accounting for Income Taxes," the quarterly tax provision is based on our current estimate of the annual effective tax rate less the prior quarter's year-to-date provision.

Our income tax benefit for the six months ended June 30, 2020 totaled $8.7 million, or 5.9% of pretax loss, compared to a benefit of $7.3 million, or 18.7% of pretax loss, for the six months ended June 30, 2019. For the six months ended June 30,March 31, 2020, we recorded a deferred tax benefit of ~~$9.6~~$12.4 million offset by a valuation allowance of ~~$0.7~~$3.4 million against the Canadian net deferred tax assets. Our effective tax rate for the six months ended June 30, 2020 was impacted by considering Canada and the U.S. loss jurisdictions. Although Australia is not considered a loss jurisdiction for the six months ended June 30, 2020, our effective tax rate is impacted by utilization of deferred tax assets and a release of the corresponding valuation allowance in

~~CIVEO CORPORATION~~

~~NOTES TO UNAUDITED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(Continued)~~

~~Australia, resulting in no income tax expense for that jurisdiction. For the six months ended June 30, 2019, Australia and the U.S. were considered loss jurisdictions.~~

~~11.~~10.COMMITMENTS AND CONTINGENCIES

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

~~12.~~11.ACCUMULATED OTHER COMPREHENSIVE LOSS

Our accumulated other comprehensive loss increased ~~$19.1~~$1.6 million from ~~$363.2~~$349.0 million at December 31, ~~2019~~2020 to ~~$382.3~~$350.6 million at ~~June 30, 2020,~~March 31, 2021, as a result of foreign currency exchange rate fluctuations. Changes in other comprehensive loss during the first ~~six~~three months of ~~2020~~2021 were primarily driven by the Australian dollar ~~and~~decreasing in value compared to the U.S. dollar, partially offset by the Canadian dollar ~~decreasing~~increasing in value compared to the U.S. dollar. Excluding intercompany balances, our Canadian dollar and Australian dollar functional currency net assets totaled approximately C$~~0.1 billion~~160 million and A$~~0.3 billion,~~285 million, respectively, at ~~June 30, 2020.~~March 31, 2021.

~~13.GOODWILL~~

~~Changes in the carrying amount of goodwill from December 31, 2019 to June 30, 2020 are as follows (in thousands):~~

Canada Australia U.S. Total
Goodwill, net of $19.9 million accumulated impairment loss as of December 31, 2019 $ 102,238 $ 7,935 $ — $ 110,173
Foreign currency translation (8,632) (157) — (8,789)
Goodwill impairment (1) (93,606) — — (93,606)
Goodwill, net of $113.5 million accumulated impairment loss as of June 30, 2020 $ — $ 7,778 $ — $ 7,778

~~(1)See Note 6 – Impairment Charges for further information.~~12.

~~14.~~SHARE-BASED COMPENSATION

Certain key employees and non-employee directors participate in the Amended and Restated 2014 Equity Participation Plan of Civeo Corporation (the Civeo Plan). The Civeo Plan authorizes our Board of Directors and the Compensation Committee of our Board of Directors to approve grants of options, awards of restricted shares, performance awards, phantom

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

share awards and dividend equivalents, awards of deferred shares, and share payments to our employees and non-employee directors. No more than ~~28.7~~2.4 million Civeo common shares ~~may~~are authorized to be issued under the Civeo Plan.

Outstanding Awards

Restricted Share Awards / Restricted Share Units / Deferred Share Awards. Compensation expense associated with restricted share awards, restricted share units and deferred share awards recognized in the three months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ totaled ~~$0.8~~$0.5 million and $1.4 million, respectively. Compensation expense associated with restricted share awards, restricted share units and deferred share awards recognized in the six months ended June 30, 2020 and 2019 totaled $2.0 million and $2.8$1.3 million, respectively. The total fair value of restricted share awards, restricted share units and deferred share awards that vested during the three months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ was ~~$0.2~~$1.5 million and ~~$0.4~~$2.3 million, respectively. The total fair value of restricted share awards, restricted share units and deferred share awards that vested during the six months ended June 30, 2020 and 2019 was $2.6 million and $3.9 million, respectively.

At ~~June 30, 2020,~~March 31, 2021, unrecognized compensation cost related to restricted share awards, restricted share units and deferred share awards was ~~$2.8~~$0.8 million, which is expected to be recognized over a weighted average period of ~~1.2~~0.9 years.

~~CIVEO CORPORATION~~

~~NOTES TO UNAUDITED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(Continued)~~

Phantom Share Awards. On February ~~25, 2020,~~22, 2021, we granted ~~3,741,094~~270,079 phantom share awards under the Civeo Plan, which vest in three equal annual installments beginning on February ~~25, 2021.~~22, 2022. We also granted ~~1,221,725~~81,774 phantom share awards under the Canadian Long-Term Incentive Plan, which vest in three equal annual installments beginning on February ~~25, 2021.~~22, 2022.

During the three months ended ~~June 30,~~March 31, 2021 and 2020, ~~and 2019,~~ we recognized compensation expense associated with phantom shares totaling ~~$0.4~~$1.4 million and $0.3 million, respectively. ~~During the six months ended June 30, 2020 and 2019, we recognized compensation expense associated with phantom shares totaling $0.7 million and $3.4 million, respectively.~~ At ~~June 30, 2020,~~March 31, 2021, unrecognized compensation cost related to phantom shares was ~~$3.0~~$9.5 million, as remeasured at ~~June 30, 2020,~~March 31, 2021, which is expected to be recognized over a weighted average period of ~~2.5~~2.4 years.

Performance Awards. On February 22, 2021, we granted 129,754 performance awards under the Civeo Plan, which cliff vest in three years on February 22, 2024. These awards will be earned in amounts between 0% and 200% of the participant’s target performance share award, based on (1) the payout percentage associated with Civeo’s relative total shareholder return rank among a peer group that includes 17 other companies and (2) the payout percentage associated with Civeo's cumulative free cash flow over the performance period relative to a preset target. The portion of the performance awards tied to cumulative free cash flow includes a performance-based vesting requirement. The fair value of these awards is based on the closing market price of our common shares on the date of grant. We evaluate the probability of achieving the performance criteria throughout the performance period and will adjust share-based compensation expense based on the number of shares expected to vest based on our estimate of the most probable performance outcome. The ultimate payout of the cumulative free cash flow component of the award can vary from 0% to 60% based on actual results.

During the three months ended ~~June 30,~~March 31, 2021 and 2020, ~~and 2019,~~ we recognized compensation expense associated with performance awards totaling ~~$0.6~~$0.5 million and ~~$1.1 million, respectively. During the six months ended June 30, 2020 and 2019, we recognized compensation expense associated with performance awards totaling $1.5 million and $2.2~~$0.9 million, respectively. The total fair value of performance share awards that vested during the three months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019 was 0. The total fair value of performance share awards that vested during the six months ended June 30, 2020 and 2019~~ was $1.9 million and ~~$10.1~~$1.9 million, respectively.

At ~~June 30, 2020,~~March 31, 2021, unrecognized compensation cost related to performance shares was ~~$2.8~~$4.5 million, which is expected to be recognized over a weighted average period of ~~1.4~~2.4 years.

~~CIVEO CORPORATION~~

~~NOTES TO UNAUDITED CONSOLIDATED~~

~~FINANCIAL STATEMENTS~~

~~(Continued)~~

~~15.~~13.SEGMENT AND RELATED INFORMATION

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

CIVEO CORPORATION

NOTES TO UNAUDITED CONSOLIDATED

FINANCIAL STATEMENTS

(Continued)

Financial information by business segment for each of the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ is summarized in the following table (in thousands):


		Total revenues		Depreciation and amortization		Operating income (loss)		Capital expenditures		Total assets			Total revenues		Depreciation and amortization		Operating income (loss)		Capital expenditures		Total assets
Three months ended June 30, 2020
Three months ended March 31, 2021												Three months ended March 31, 2021
Canada	Canada	$	52,986	$	12,177	$	(6,719)	$	231	$	662,926	Canada	$	61,885	$	12,087	$	(7,659)	$	1,180	$	721,841
Australia	Australia	57,071		9,733		8,191		748		261,188		Australia	59,637		8,459		3,307		1,554		265,111
U.S.	U.S.	4,645		195		(2,623)		12		30,503		U.S.	3,908		566		(2,598)		369		27,869
Corporate and eliminations	Corporate and eliminations	—		100		(690)		205		(220,034)		Corporate and eliminations	0		157		(2,951)		269		(304,643)
Total	Total	$	114,702	$	22,205	$	(1,841)	$	1,196	$	734,583	Total	$	125,430	$	21,269	$	(9,901)	$	3,372	$	710,178

Three months ended June 30, 2019
Three months ended March 31, 2020												Three months ended March 31, 2020
Canada	Canada	$	78,102	$	16,127	$	(5,761)	$	9,379	$	842,551	Canada	$	79,348	$	14,369	$	(136,631)	$	610	$	649,963
Australia	Australia	30,996		10,068		(5,579)		898		276,525		Australia	49,113		9,295		6,164		463		242,238
U.S.	U.S.	13,055		3,036		(1,356)		774		57,570		U.S.	10,331		1,583		(14,134)		1,372		32,758
Corporate and eliminations	Corporate and eliminations	—		1,765		640		478		(156,241)		Corporate and eliminations	0		255		(4,468)		206		(205,436)
Total	Total	$	122,153	$	30,996	$	(12,056)	$	11,529	$	1,020,405	Total	$	138,792	$	25,502	$	(149,069)	$	2,651	$	719,523

Six months ended June 30, 2020
Canada		$	132,334	$	26,546	$	(143,350)	$	841	$	662,926
Australia		106,184		19,028		14,355		1,211		261,188
United States		14,976		1,778		(16,757)		1,384		30,503
Corporate and eliminations		—		355		(5,158)		411		(220,034)
Total		$	253,494	$	47,707	$	(150,910)	$	3,847	$	734,583

Six months ended June 30, 2019
Canada		$	144,872	$	32,355	$	(17,356)	$	16,443	$	842,551
Australia		59,417		19,825		(5,964)		1,833		276,525
United States		26,414		6,102		(2,317)		2,294		57,570
Corporate and eliminations		—		3,496		(4,312)		638		(156,241)
Total		$	230,703	$	61,778	$	(29,949)	$	21,208	$	1,020,405

1918

Cautionary Statement Regarding Forward-Looking Statements

This quarterly report on Form 10-Q contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the Exchange Act). The Private Securities Litigation Reform Act of 1995 provides safe harbor provisions for forward-looking information. The forward-looking statements can be identified by the use of forward-looking terminology including “may,” “expect,” “anticipate,” “estimate,” “continue,” “believe” or other similar words. The forward-looking statements in this report include, but are not limited to, the statements in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” relating to our expectations about the macroeconomic environment and industry conditions, including the impact of COVID-19 and the response thereto and the ~~decline~~volatility in the price of and demand for oil, as well as our expectations about capital expenditures in ~~2020~~2021 and beliefs with respect to liquidity ~~needs, including our ability to remain in compliance with our financial covenants.~~needs. Actual results could differ materially from those projected in the forward-looking statements as a result of a number of important factors. For a discussion of known material factors that could affect our results, please refer to ~~"Risk Factors" included in Part II, Item 1A of this report,~~ “Risk Factors,” ~~“Forward-Looking~~“Cautionary Statement Regarding Forward-Looking Statements,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 and our subsequent SEC filings. Should one or more of these risks or uncertainties materialize, or should the assumptions prove incorrect, actual results may differ materially from those expected, estimated or projected. Our management believes these forward-looking statements are reasonable. However, you should not place undue reliance on these forward-looking statements, which are based only on our current expectations and are not guarantees of future performance. All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the foregoing. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to publicly update or revise any of them in light of new information, future events or otherwise, except to the extent required by applicable law.

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

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

You should read the following discussion and analysis together with our consolidated financial statements and the notes to those statements included elsewhere in this quarterly report on Form 10-Q.

Reverse Share Split

On November 19, 2020, we effected a reverse share split where each twelve issued and outstanding common shares were converted into one common share (Reverse Share Split). Our common shares began trading on a reverse share split adjusted basis on November 19, 2020. All common share and per common share data included in this quarterly report have been retroactively adjusted to reflect the Reverse Share Split.

See Note 1 - Description of Business and Basis of Presentation to the notes to the unaudited consolidated financial statements included in Item 1 of this quarterly report for further discussion.

Overview and Macroeconomic Environment

We provide hospitality services to the natural resources industry in Canada, Australia and the U.S. Demand for our services can be attributed to two phases of our customers’ projects: (1) the development or construction phase; and (2) the operations or production phase. ~~The majority~~Historically, initial demand for our hospitality services has been driven by our customers’ capital spending programs related to the construction and development of natural resource projects and associated infrastructure, as well as the exploration for oil and natural gas. Long-term demand for our services ~~in our Canadian lodges and Australian villages is~~has been driven by ~~on-going operations~~natural resource production, maintenance and ~~maintenance~~operation of ~~oil sands and mining facilities.~~those facilities as well as expansion of those sites. In general, industry ~~operating and maintenance~~capital spending programs are based on the outlook for commodity prices, economic growth, global commodity supply/demand dynamics and estimates of resource production. As a result, demand for our hospitality services is largely sensitive to expected commodity prices, principally related to ~~crude~~ oil, metallurgical (met) coal, liquefied natural gas (LNG) and iron ore. Other factors that can affect our business and financial results include the general global economic environment and regulatory changes in

Canada, Australia, the U.S. and other markets, including governmental measures introduced to fight climate change or to help slow the spread or mitigate the impact of COVID-19.

Our business is predominantly located in northern Alberta, ~~Canada,~~Canada; British Columbia, ~~Canada,~~Canada; Queensland, ~~Australia~~Australia; and Western Australia. We derive most of our business from natural resource companies who are developing and producing oil sands, ~~and~~ met coal, LNG and iron ore resources and, to a lesser extent, other hydrocarbon and mineral resources. Approximately ~~70%~~64% of our revenue is generated by our lodges in Canada and ~~villages.~~our villages in Australia. Where traditional accommodations and infrastructure are insufficient, inaccessible or cost ineffective, our lodge and village facilities provide comprehensive hospitality services similar to those found in an urban hotel. We typically contract our facilities to our customers on a ~~fee-per-day~~fee-per-person-per- day basis that covers lodging and meals and is based on the duration of customer needs, which can range from several weeks to several years.

Generally, our core Canadian oil sands and Australian mining customers are making ~~multi-billion dollar~~significant capital investments to develop their prospects, which have estimated reserve lives ranging from ten years to in excess of 30 years. Consequently, these investments are primarily dependent on those customers’ long-term views of commodity demand and prices.

The spread of COVID-19 and the response thereto ~~during the first half of 2020 has~~have negatively impacted the global economy. The actions taken to mitigate the spread of COVID-19 and the risk of infection have altered, and are expected to continue to alter, governmental and private-sector policies and behaviors in ways that have had a significant negative effect on oil consumption, such as government-imposed or voluntary social distancing and quarantining, reduced travel and remote work policies. Additionally, global oil prices dropped to historically low levels in March and April 2020 due to severely reduced global oil demand, high global crude inventory levels, uncertainty around timing and slope of worldwide economic recovery after COVID-19 related economic shut-downs and effectiveness of production cuts by major oil producing countries, such as Saudi Arabia, Russia and the U.S. ~~While in~~In mid-April 2020, OPEC+ (the combination of historical OPEC members and other significant oil producers, such as Russia) announced ~~potential~~ production cuts of up to approximately 10 million barrels per ~~day, these cuts are not expected to be sufficient to avoid a historic glut~~day. However, oil prices remained at depressed levels throughout most of 2020, before modest improvement late in the ~~second~~year and ~~third quarters of 2020. As a result, oil prices~~into early 2021. Prices are expected to remain ~~at low levels for the remainder of 2020.~~relatively volatile throughout 2021.

The economic disruption ~~in 2020~~ caused by the spread of COVID-19 and decline in the price of and demand for oil ~~has~~have impacted the activity in the Canadian oil sands, and we have seen a decrease in ~~occupancy~~demand for rooms by our oil sands customers. AThe reduction in the occupancy at our Canadian oil sands lodges negatively impacted our ~~business~~occupancy in 2020 and the first quarter ~~ended June 30, 2020~~of 2021 and could continue to negatively impact our business if oil prices continue to remain atvolatile.

Despite the ~~current lower levels.~~aforementioned negative impact of COVID-19 on the global economy, the impact on the Australian mining industry in 2020 was relatively muted. Due to ~~lower oil prices~~strong Chinese steel demand, supply disruptions in other countries and limited COVID-19 cases in Australia, Australian met coal and iron ore activity was relatively buoyant in 2020 and the ~~economic disruption caused by COVID-19, we implemented certain cost containment initiatives, including salary and total compensation reductions~~beginning of between 10% to 20% for the Board, executive leadership team and other senior management, headcount reduction in North America of approximately 25% in March through June 2020, and cutting expected 2020 capital spending by approximately 25%. 2021.

We continue to closely monitor the COVID-19 situation and have taken measures to help ensure the health and well-being of our employees, guests and contractors, including screening ~~for~~of individuals that enter our facilities, social distancing practices, enhanced cleaning and deep sanitization, the suspension of nonessential employee travel and implementation of work-from-home policies, where applicable.

Alberta, Canada. In Canada, Western Canadian Select (WCS) crude is the benchmark price for our oil sands customers. Pricing for WCS is driven by several factors, including the underlying price for West Texas Intermediate (WTI) crude, the availability of transportation infrastructure (consisting of pipelines and crude by railcar) and recent actions by the Alberta provincial government to limit oil production from the province. Historically, WCS has traded at a discount to WTI, creating a “WCS Differential,” due to transportation costs and ~~limited~~ capacity restrictions to move Canadian heavy oil production to refineries, primarily along the U.S. Gulf Coast. The WCS Differential has varied depending on the extent of transportation capacity availability.

Certain expansionary oil pipeline projects have the potential to both drive incremental demand for mobile ~~accommodations~~ assets and to improve take-away capacity for Canadian oil sands producers over the longer term. While these pipeline projects, including Kinder Morgan’s Trans Mountain Pipeline ~~and the Keystone XL Pipeline (KXL)~~(TMX), have recently received incremental regulatory approvals, it is still not certain if any of the proposed pipeline projects will ultimately be ~~constructed. These projects~~completed. Certain segments of the TMX pipeline have ~~been~~begun construction; however, the construction timeline continues to be delayed due to the lack of agreement between the Canadian federal government, which supports the pipeline projects, and the British Columbia provincial government. The Canadian federal government ~~recently~~ acquired ~~Kinder Morgan’s Trans Mountain Pipeline,~~TMX pipeline in 2018, approved the expansion of the project and is currently working through the revised construction timeline. It was recently announced that the Alberta provincial government will financially support the construction of the KXL pipeline and construction of this pipeline expansion could begin later in 2020. Additionally, the U.S. Supreme Court refused to renew a water permit for the KXL pipeline in July 2020. Construction of the KXL pipeline

WCS prices in the ~~U.S. is currently suspended, which may delay connection~~first quarter of ~~the pipeline with Canadian oil sands producers.~~

~~While WCS prices~~2021 averaged $46.28 per barrel compared to a low of $19.73 in the second quarter of 2020 ~~averaged $19.73 per barrel, by June 30, 2020~~and a high of $49.93 in the ~~WCS price had increased to $29.14 per barrel.~~second quarter of 2018. The WCS Differential decreased from ~~$15.40~~$15.35 per barrel at the end of the fourth quarter of 2020 to $10.26 at the end of the first quarter of ~~2020 to $10.13 per barrel at~~2021. In 2018, the ~~end~~Government of Alberta announced it would mandate temporary curtailments of the ~~second~~province’s oil production. However, monthly production limits were put on hold in December 2020 until further notice, allowing operators to produce freely at their discretion while the government monitors production. Should forecasts show storage inventories approaching maximum capacity, the government may reintroduce production limits. The curtailment initially resulted in a narrowing WCS Differential in December 2018, which increased in 2019 before narrowing again in the first quarter of 2020. As of ~~July 24, 2020,~~April 26, 2021, the WTI price was ~~$41.14~~$61.91 and the WCS price was ~~$31.62,~~$49.71, resulting in a WCS Differential of ~~$9.52.~~$12.20.

~~The~~Together with the initial spread of COVID-19, the depressed price levels of both WTI and WCS ~~are expected to~~ materially ~~impact exploration, development,~~impacted 2020 maintenance and production spending and activity by Canadian operators and, therefore, demand for our hospitality services. ~~For example, on March 23, 2020, the Fort Hills Energy LP project announced a reduction~~While some of ~~activity from two trains to one~~

~~train. Many of the publicly traded~~our Canadian oil ~~and gas companies have announced significant reductions in their spending forecasts for 2020, reductions~~sands customers conducted maintenance projects in the ~~range~~third quarter 2020, activity was negatively impacted by the current environment. Customers began increasing production activity in the fourth quarter of ~~30-40%.~~2020 and into the first quarter of 2021. Continued uncertainty, including about the impact of COVID-19, and commodity price volatility and regulatory complications ~~are expected to~~could cause our Canadian oil sands and pipeline customers to reduce production, delay expansionary and maintenance spending and defer additional investments in their oil sands assets. Additionally, if oil prices do not improve or stabilize, the resulting impact could continue to negatively affect the value of our long-lived assets.

British Columbia, Canada. Our Sitka Lodge supports the ~~British Columbia~~ LNG ~~market~~Canada project and related pipeline ~~projects.~~projects (see discussion below). From a macroeconomic standpoint, ~~global~~ LNG ~~imports~~demand continued to ~~significantly increase in 2019, rising by 40 million tonnes and~~grow despite the COVID-19 pandemic, reinforcing the need for the global LNG industry to expand access to natural gas. Evolving government energy policies around the world have amplified support for cleaner energy supply, creating more opportunities for natural gas and LNG. Accordingly, the current view is additional investment in LNG supply will be needed to meet the expected long-term LNG demand growth.

~~While~~Currently, Western Canada does not ~~currently~~ have any operational LNG export ~~facilities,~~facilities. LNG Canada (LNGC), a joint venture ~~between~~among Shell Canada Energy, an affiliate of Royal Dutch Shell plc (40 percent), and affiliates of PETRONAS, through its wholly-owned entity, North Montney LNG Limited Partnership (25 percent), PetroChina (15 percent), Mitsubishi Corporation (15 percent) and Korea Gas Corporation (5 percent), is currently constructing a liquefaction and export facility in Kitimat, British Columbia (Kitimat LNG Facility). ~~As a result,~~ British Columbia LNG activity and related pipeline projects ~~have become~~are a material driver of activity for our Sitka Lodge, as well as for our mobile ~~fleet~~ assets, which are contracted to serve several portions of the related pipeline construction activity. The actual timing of when revenue is realized from the ~~CGL~~Coastal Gas Link pipeline and Sitka Lodge contracts could be impacted by any delays in the construction of the Kitimat LNG Facility or the pipeline, ~~including recent~~such as protest blockades ~~that aim to delay construction.~~ and the COVID-19 pandemic.

In late March 2020, LNGC announced steps being taken to reduce the spread of COVID-19, including reduction of the workforce at the project site to essential personnel only. This resulted in a reduction in occupancy at our Sitka Lodge during the second quarter of ~~2020. Occupancy at the Sitka Lodge has returned~~2020, before returning to expected levels ~~during July~~in the second half of 2020. In late December 2020, British Columbia’s public health officer issued a health order limiting workforce size at all large industrial projects across the province, including LNGC. This order once again reduced occupancy at our Sitka Lodge in the first quarter of 2021, and we expect occupancy to remain subdued until this health order is lifted or relaxed.

Australia. In Australia, 82% of our rooms are located in the Bowen Basin of Queensland, Australia and primarily serve met coal mines in that region. Met coal pricing and production growth in the Bowen Basin region is predominantly influenced by the levels of global steel production, which ~~decreased~~increased by 6%10% during the first ~~half~~three months of ~~2020~~2021 compared to the ~~first half~~same period of ~~2019.~~2020. As of ~~July 24, 2020,~~April 26, 2021, met coal spot prices were ~~$112~~$111 per metric tonne. Long-term demand for steel is expected to be driven by global infrastructure spending and increased steel consumption per capita in developing economies, such as China and India, whose current consumption per capita is a fraction of developed countries. ~~The outlook~~In 2020, the impact of the outbreak of COVID-19 led to a high level of uncertainty for ~~steel consumption is currently uncertain from both a supply and~~ demand ~~perspective with some large~~of iron ore and met ~~coal producing jurisdictions curtailing or ceasing production during the COVID-19 pandemic, affecting supply. The impact on the~~coal. However, an increase in global infrastructure spending to stimulate economies is expected to support demand for steel with the closure or curtailment of manufacturing in economies affected by COVID-19, which will only return to normal levels of consumption once jurisdictions lift quarantine requirements and manufacturing facilities are reopened, is also uncertain. There is a high likelihood that many countries will use infrastructure spend as part of their economic recovery plan, which would have a positive impact on the demand forraw materials, particularly met coal and iron ore.

Currently, China and Australia are in a trade dispute that has led to China implementing a trade embargo on Australian coal. China has historically accounted for approximately 22% of Australia’s met coal exports. The continuing uncertainty in the Chinese demand for Australian met coal has led to volatile Australian met coal spot ~~price. To date, we~~pricing. The Chinese trade embargo and volatile Australian met coal spot pricing have ~~not seen~~created a ~~decline in~~shuffling of global export trade flows. If this dispute continues, it could continue to impact pricing volatility, and demand for Australian met coal and consequently lead to reduced occupancy at our Australian ~~villages resulting from COVID-19.~~villages.

Activity in Western Australia is driven primarily by iron ore production, which is a key steel-making ingredient. As of ~~July 24, 2020,~~April 26, 2021, iron ore spot prices were ~~$106.27~~$184.43 per metric tonne.

~~On July 1, 2019, we acquired Action Industrial Catering (Action), a provider of~~Our integrated services business provides catering and managed services to the mining industry in Western Australia. ~~Accordingly, we also~~We have contracts ~~in place for~~to manage customer-owned villages in Western Australia which ~~service~~ primarily support iron ore mines in addition to gold, lithium and nickel mines. We believe iron ore prices are currently at a level that may contribute to increased activity over the long term if our customers view these price levels as sustainable.

Met coal and iron ore prices to date have remained at levels that should support the current levels of occupancy in our Australia villages and the customer locations that we manage under ~~Action.~~our integrated services business. Accordingly, we plan to continue focusing on enhancing the quality of our operations, maintaining financial discipline, proactively managing our business as market conditions continue to ~~evolve and integrating Action into our business.~~evolve.

U.S. Our U.S. business supports oil shale drilling and completion activity and is primarily tied to WTI oil prices in the U.S. shale formations in the Permian Basin, the Mid-Continent, the Bakken and the Rockies. ~~The~~During 2019, the U.S. oil rig count and associated completion activity ~~has been~~decreased due to the oil price decline in late 2018 and early 2019 coupled with other market dynamics negatively ~~impacted in~~impacting exploration and production (E&P) spending, finishing the ~~first half of~~year at 677 rigs. In 2020, the U.S. oil rig count and associated completion activity further decreased due to the global oil price decline discussed above. ~~Currently, only 188~~Only 324 oil rigs were active at the end of the ~~second~~first quarter of ~~2020.~~2021. The Permian Basin remains the most active U.S. unconventional play, representing ~~70%~~68% of the oil rigs active in the U.S. ~~market~~ at the end of the ~~second~~first quarter of ~~2020.~~2021. The lower U.S. rig count and decline in oil prices resulted in decreased U.S. oil production from an average of 11.3 million barrels per day in 2020 to an average of 11.1 million barrels per day at the end of the first quarter of 2021. As of ~~July 24, 2020,~~April 23, 2021, there were ~~181~~343 active oil rigs in the U.S. (as measured by Bakerhughes.com). With the recent ~~reduction~~volatility in oil prices and a resulting reduction in spending by ~~exploration and production~~E&P companies, we ~~will be exiting~~have exited the

Bakken and reduced our presence in the Rockies ~~markets~~regions for our U.S. mobile ~~well site units.~~assets. Those assets ~~will~~have either bebeen sold or transported to our ~~Texas~~Permian Basin and ~~Oklahoma~~Mid-Continent district locations. This process is underway and we expect it to be completed during the first half of 2021. U.S. oil shale drilling and completion activity will continue to be dependent on sustained higher WTI oil prices, pipeline capacity and sufficient capital to support E&P drilling and completion plans. In addition, consolidation among our E&P customer base in the U.S. has historically created short-term spending and activity dislocations.Should the current trend of industry consolidation continue, we may see activity, utilization and occupancy declines in the near term.

Recent Commodity Prices. Recent WTI crude, WCS crude and met coal pricing trends are as follows:


		Average Price (1)											Average Price (1)
Quarter ended	Quarter ended	WTI Crude (per bbl)		WCS Crude (per bbl)		Hard Coking Coal (Met Coal) (per tonne)		Quarter ended	WTI Crude (per bbl)		WCS Crude (per bbl)		Hard Coking Coal (Met Coal) (per tonne)
Third Quarter through 7/24/2020		$	40.74	$	32.27	$	114.16
Second Quarter through April 26, 2021								Second Quarter through April 26, 2021	$	61.20	$	50.17	$	111.95
3/31/2021								3/31/2021	58.13		46.28		127.95
12/31/2020								12/31/2020	42.63		31.34		109.37
9/30/2020								9/30/2020	40.90		31.15		113.30
6/30/2020	6/30/2020	27.95		19.73		120.27		6/30/2020	27.95		19.73		120.27
3/31/2020	3/31/2020	45.38		27.92		156.17		3/31/2020	45.38		27.92		156.17
12/30/2019	12/30/2019	56.85		37.94		141.39		12/30/2019	56.85		37.94		141.39
9/30/2019	9/30/2019	56.40		43.88		160.25		9/30/2019	56.40		43.88		160.25
6/30/2019	6/30/2019	59.89		47.39		204.78		6/30/2019	59.89		47.39		204.78
3/31/2019	3/31/2019	54.87		44.49		203.30		3/31/2019	54.87		44.49		203.30
12/31/2018	12/31/2018	59.32		25.66		223.02		12/31/2018	59.32		25.66		223.02
9/30/2018	9/30/2018	69.61		41.58		188.46		9/30/2018	69.61		41.58		188.46
6/30/2018	6/30/2018	67.97		49.93		189.41		6/30/2018	67.97		49.93		189.41
3/31/2018	3/31/2018	62.89		37.09		228.82		3/31/2018	62.89		37.09		228.82
12/31/2017		55.28		38.65		202.33
9/30/2017		48.16		37.72		187.89
6/30/2017		48.11		38.20		193.27

(1)Source: WTI crude prices are from U.S. Energy Information Administration (EIA), WCS crude prices are from Bloomberg and hard coking coal prices are from IHS Markit.

Foreign Currency Exchange Rates. Exchange rates between the U.S. dollar and each of the Canadian dollar and the Australian dollar influence our U.S. dollar reported financial results. Our business has historically derived the vast majority of its revenues and operating income (loss) in Canada and Australia. These revenues and profits/losses are translated into U.S. dollars for U.S. GAAP financial reporting purposes. The following tables summarize the fluctuations in the exchange rates between the U.S. dollar and each of the Canadian dollar and the Australian dollar:


		Three Months Ended June 30,							Six Months Ended June 30,						Three Months Ended March 31,
		2020	2019	Change	Percentage	2020	2019	Change	Percentage		2021	2020	Change	Percentage
Average Canadian dollar to U.S. dollar	Average Canadian dollar to U.S. dollar	$0.72	$0.75	(0.03)	(3.5)%	$0.73	$0.75	($0.02)	(2.2)%	Average Canadian dollar to U.S. dollar	$0.790	$0.745	0.05	6.0%
Average Australian dollar to U.S. dollar	Average Australian dollar to U.S. dollar	$0.66	$0.70	(0.04)	(6.1)%	$0.66	$0.71	($0.05)	(6.8)%	Average Australian dollar to U.S. dollar	$0.773	$0.658	0.12	17.5%


		As of								As of
		June 30, 2020	December 31, 2019	Change	Percentage		March 31, 2021	December 31, 2020	Change	Percentage
Canadian dollar to U.S. dollar	Canadian dollar to U.S. dollar	$0.73	$0.77	(0.04)	(4.7)%	Canadian dollar to U.S. dollar	$0.795	$0.785	0.01	1.3%
Australian dollar to U.S. dollar	Australian dollar to U.S. dollar	$0.69	$0.70	(0.01)	(1.7)%	Australian dollar to U.S. dollar	$0.761	$0.773	(0.01)	(1.6)%

These fluctuations of the Canadian and Australian dollars have had and will continue to have an impact on the translation of earnings generated from our Canadian and Australian subsidiaries and, therefore, our financial results.

Capital Expenditures. We continue to monitor the COVID-19 global pandemic and the responses thereto, the global economy, the price of and demand for crude oil, met coal, LNG and iron ore and the resultant impact on the capital spending plans of our customers in order to plan our business activities. ~~In April 2020, we revised downward our 2020 capital expenditure plans~~

~~and we~~We currently expect that our ~~2020~~2021 capital expenditures, exclusive of any ~~expansionary spending, which is contingent on obtaining customer contracts,~~business acquisitions, will total approximately ~~$15~~$20 million to $25 million, compared to ~~2019~~2020 capital expenditures of ~~$29.8~~$10.1 million. We may adjust our capital expenditure plans in the future as we continue to monitor customer activity and the impact of COVID-19. See “Liquidity and Capital Resources” below for further discussion of ~~2020~~2021 capital expenditures.

Results of Operations

Unless otherwise indicated, discussion of results for the three ~~and six~~ months ended ~~June 30, 2020,~~March 31, 2021, is based on a comparison to the corresponding period of ~~2019.~~2020.

Results of Operations – Three Months Ended ~~June 30, 2020~~March 31, 2021 Compared to Three Months Ended ~~June 30, 2019~~March 31, 2020


		Three Months Ended June 30,											Three Months Ended March 31,
		2020		2019		Change			2021		2020		Change

		($ in thousands)											($ in thousands)
Revenues	Revenues							Revenues
Canada	Canada	$	52,986	$	78,102	$	(25,116)	Canada	$	61,885	$	79,348	$	(17,463)
Australia	Australia	57,071		30,996		26,075		Australia	59,637		49,113		10,524
U.S. and other	U.S. and other	4,645		13,055		(8,410)		U.S. and other	3,908		10,331		(6,423)
Total revenues	Total revenues	114,702		122,153		(7,451)		Total revenues	125,430		138,792		(13,362)
Costs and expenses	Costs and expenses							Costs and expenses
Cost of sales and services	Cost of sales and services							Cost of sales and services
Canada	Canada	42,465		59,276		(16,811)		Canada	51,885		64,272		(12,387)
Australia	Australia	34,913		16,055		18,858		Australia	42,903		29,553		13,350
U.S. and other	U.S. and other	5,755		9,909		(4,154)		U.S. and other	5,022		9,488		(4,466)
Total cost of sales and services	Total cost of sales and services	83,133		85,240		(2,107)		Total cost of sales and services	99,810		103,313		(3,503)
Selling, general and administrative expenses	Selling, general and administrative expenses	11,490		12,530		(1,040)		Selling, general and administrative expenses	14,181		13,937		244
Depreciation and amortization expense	Depreciation and amortization expense	22,205		30,996		(8,791)		Depreciation and amortization expense	21,269		25,502		(4,233)
Impairment expense	Impairment expense	—		5,546		(5,546)		Impairment expense	—		144,120		(144,120)
Other operating income	Other operating income	(285)		(103)		(182)		Other operating income	71		989		(918)
Total costs and expenses	Total costs and expenses	116,543		134,209		(17,666)		Total costs and expenses	135,331		287,861		(152,530)
Operating loss	Operating loss	(1,841)		(12,056)		10,215		Operating loss	(9,901)		(149,069)		139,168

Interest expense and income, net	Interest expense and income, net	(3,850)		(6,698)		2,848		Interest expense and income, net	(3,362)		(5,579)		2,217
Other income	Other income	12,642		1,055		11,587		Other income	4,914		25		4,889
Income (loss) before income taxes		6,951		(17,699)		24,650
Loss before income taxes								Loss before income taxes	(8,349)		(154,623)		146,274
Income tax (expense) benefit	Income tax (expense) benefit	(122)		2,850		(2,972)		Income tax (expense) benefit	(1,076)		8,811		(9,887)
Net income (loss)		6,829		(14,849)		21,678
Net loss								Net loss	(9,425)		(145,812)		136,387
Less: Net income attributable to noncontrolling interest	Less: Net income attributable to noncontrolling interest	222		—		222		Less: Net income attributable to noncontrolling interest	59		258		(199)
Net income (loss) attributable to Civeo Corporation		6,607		(14,849)		21,456
Dividends attributable to preferred shares		471		461		10
Net income (loss) attributable to Civeo common shareholders		$	6,136	$	(15,310)	$	21,446
Net loss attributable to Civeo Corporation								Net loss attributable to Civeo Corporation	(9,484)		(146,070)		136,586
Less: Dividends attributable to preferred shares								Less: Dividends attributable to preferred shares	478		468		10
Net loss attributable to Civeo common shareholders								Net loss attributable to Civeo common shareholders	$	(9,962)	$	(146,538)	$	136,576

We reported net income attributable to Civeo for the quarter ended June 30, 2020 of $6.1 million, or $0.03 per diluted share. As further discussed below, net income included $4.7 million ($4.7 million after-tax, or $0.03 per diluted share) of income associated with the settlement of a representations and warranties claim related to the Noralta acquisition included in Other income.

We reported net loss attributable to Civeo for the quarter ended ~~June 30, 2019~~March 31, 2021 of ~~$15.3~~$10.0 million, or ~~$0.09~~$0.70 per diluted share.

We reported net loss attributable to Civeo for the quarter ended March 31, 2020 of $146.5 million, or $10.43 per diluted share. As further discussed below, net loss included (i) a ~~$5.5~~$93.6 million pre-tax loss ($~~5.5~~93.6 million after-tax, or ~~$0.03~~$6.67 per diluted share) resulting from the impairment of ~~fixed~~goodwill in our Canada segment included in Impairment expense, (ii) a $38.1 million pre-tax loss ($38.1 million after-tax, or $2.71 per diluted share) resulting from the impairment of long-lived assets in our Canada segment included in Impairment expense and (iii) a $12.4 million pre-tax loss ($12.4 million after-tax, or $0.89 per diluted share) resulting from the impairment of long-lived assets in our U.S. segment included in Impairment expense.

Revenues. Consolidated revenues decreased ~~$7.5~~$13.4 million, or 6%10%, in the ~~second~~first quarter of ~~2020~~2021 compared to the ~~second~~first quarter of ~~2019.~~2020. This decrease was primarily due to ~~lower revenue in Canada resulting from lower~~(i) reduced occupancy at ~~oil sands~~our Canadian lodges ~~and reduced food services activity, both~~ related to the COVID-19 pandemic, (ii) reduced food service activity, as an overflow site supporting a LNG-related project in 2020 is no longer required, (iii) decreased activity at our Western Australia and Bowen Basin villages and (iv) lower ~~oil prices. Additionally, lower~~

activity levels in certain markets in the U.S. These items were partially offset by (i) increased occupancy at our Australian integrated services villages, (ii) increased mobile asset activity from a pipeline project in Canada and ~~weaker~~(iii) a stronger Australian and Canadian ~~and Australian dollars~~dollar relative to the U.S. dollar in the ~~second~~first quarter of ~~2020~~2021 compared to the ~~second~~first quarter of 2019 contributed to decreased revenues. These items were partially offset by higher revenues in Australia due to the Action acquisition completed on July 1, 2019, increased occupancy at our Bowen Basin villages and increased mobile camp activity from a pipeline project in Canada.2020. See the discussion of segment results of operations below for further information.

Cost of Sales and Services. Our consolidated cost of sales and services decreased ~~$2.1~~$3.5 million, or 2%3%, in the ~~second~~first quarter of ~~2020~~2021 compared to the ~~second~~first quarter of ~~2019.~~2020. This decrease was primarily due to ~~lower cost of sales in Canada resulting from lower~~(i) reduced occupancy at ~~oil sands~~our Canadian lodges ~~and reduced food services activity, both~~ related to the COVID-19 pandemic, (ii) reduced food services activity, as an overflow site supporting a LNG-related project in 2020 is no longer required, (iii) decreased activity at our Western Australia and ~~lower oil prices. Additionally,~~Bowen Basin villages and (iii) lower activity ~~levels~~ in certain markets in the U.S. These items were partially offset by increased cost of sales and ~~weaker~~services due to (i) increased occupancy at our Australian integrated services villages and increased cost of temporary labor due to ongoing labor shortages in Australia, (ii) increased mobile asset activity from a pipeline project in Canada and (iii) a stronger Australian and Canadian ~~and Australian dollars~~dollar relative to the U.S. dollar in the ~~second~~first quarter of ~~2020~~2021 compared to the ~~second~~first quarter of 2019 contributed to decreased cost of sales and services. This was partially offset by the Action acquisition, increased occupancy at our Bowen Basin villages in Australia and higher cost of sales and services due to increased mobile camp activity from a pipeline project in Canada.2020. See the discussion of segment results of operations below for further information.

Selling, General and Administrative Expenses. SG&A expense ~~decreased $1.0~~increased $0.2 million, or 8%2%, in the ~~second~~first quarter of ~~2020~~2021 compared to the ~~second~~first quarter of ~~2019.~~2020. This ~~decrease~~increase was primarily due to ~~lower share-based~~higher incentive compensation ~~expense, lower professional fees~~costs and ~~lower travel and entertainment expenses,~~compensation expense, partially offset by higher incentive compensation costs. The decrease in share-based compensation was due to a reduction in the amount of restricted share and performance share awards outstanding and the reduction in our stock price associated with phantom share awards during the second quarter of 2020 compared to the second quarter of 2019. lower professional fees.

Depreciation and Amortization Expense. Depreciation and amortization expense decreased ~~$8.8~~$4.2 million, or ~~28%~~17%, in the ~~second~~first quarter of ~~2020~~2021 compared to the ~~second~~first quarter of ~~2019.~~2020. The decrease was primarily due to (1) certain assets and intangibles becoming fully depreciated during 2019, (2) the extension of the remaining life of certain long-lived accommodation assets in Canada during the fourth quarter of 2019, (3)(i) the impairment of certain long-lived assets in Canada and the U.S. during the first quarter of 2020, (ii) the extension of the remaining life of certain long-lived assets in the U.S. during the first quarter of 2020 and ~~(4) weaker~~(iii) certain assets and intangibles becoming fully depreciated during 2020. These items were partially offset by a stronger Australian and Canadian ~~and Australian dollars~~dollar relative to the U.S. dollar in the ~~second~~first quarter of 2021 compared to the first quarter of 2020.

Impairment Expense. Impairment expense of $144.1 million in the first quarter of 2020 ~~compared to~~included the ~~second quarter of 2019. These items were partially offset by additional depreciation and intangible amortization expense related to our Action acquisition in 2019.~~following items:

~~Impairment Expense.~~• ~~We recorded pre-tax~~Pre-tax impairment expense of ~~$5.5~~$93.6 million related to the impairment of goodwill in ~~second quarter~~our Canadian reporting unit.

•Pre-tax impairment expense of ~~2019~~$38.1 million associated with long-lived assets in our ~~Australian~~Canadian reporting unit.

•Pre-tax impairment expense of $12.4 million associated with long-lived assets in our U.S. reporting unit.

Please see Note 6 - Impairment Charges to the notes to the unaudited consolidated financial statements included in Item 1 of this quarterly report for further discussion.

Operating~~Income~~ (Loss). Income. Consolidated operating loss decreased ~~$10.2~~$139.2 million, or ~~85%~~93%, in the ~~second~~first quarter of 2021 compared to the first quarter of 2020, ~~compared to the second quarter of 2019,~~ primarily due to ~~lower depreciation and amortization expense, lower~~ impairment expense of goodwill and ~~increased activity levels~~long-lived assets in ~~Australia, partially offset by decreased activity levels in Canada and U.S. markets.~~2020.

Interest Expense and Income, net. Net interest expense decreased by ~~$2.8~~$2.2 million, or ~~43%~~40%, in the ~~second~~first quarter of ~~2020~~2021 compared to the ~~second~~first quarter of ~~2019,~~2020, primarily related to lower average debt levels and lower interest rates on term loan and revolving credit facility borrowings during ~~2020~~2021 compared to ~~2019.~~2020.

Other Income. Consolidated other income increased ~~$11.6~~$4.9 million ~~or 1098%,~~ in the ~~second~~first quarter of 2021 compared to the first quarter of 2020, ~~compared to the second quarter of 2019,~~ primarily ~~due to $4.7 million of other income associated with the settlement of a representations and warranties claim~~ related to the ~~Noralta acquisition, $6.2~~2021 sale of a manufacturing facility and mobile assets in Canada and $2.8 million ~~of other income~~ related to proceeds from the Canada Emergency Wage Subsidy (CEWS) and a higher gain on sale of assets compared to the second quarter of 2019. The second quarter of 2019 included $1.1 million of other income related to proceeds from an insurance claim associated with the closure of a lodge in 2018 for maintenance-related operational issues.during 2021.

Income Tax (Expense) Benefit. Our income tax ~~benefit~~expense for the three months ended ~~June 30, 2020~~March 31, 2021 totaled ~~$0.1~~$1.1 million, or ~~1.8%~~(12.9%) of pretax loss, compared to aan income tax benefit of ~~$2.9~~$8.8 million, or ~~16.1%~~5.7% of pretax loss, for the three months ended ~~June 30, 2019. Under ASC 740-270, "Accounting~~March 31, 2020. Our effective tax rate for ~~Income Taxes,"~~both the ~~quarterly tax provision is based on our current estimate of~~three months ended March 31, 2021 and March 31, 2020 was impacted by considering Canada and the U.S. loss jurisdictions that were removed from the annual effective tax rate ~~less~~computation for purposes of computing the ~~prior quarter's year-to-date~~interim tax provision. Additionally, our effective tax rate for the three months ended March 31, 2020 was impacted by a deferred tax benefit of $12.4 million offset by an increase of $3.4 million in the valuation allowance in Canada.

Other Comprehensive Income (Loss). Other comprehensive ~~income increased $28.3~~loss decreased $46.9 million in the ~~second~~first quarter of ~~2020~~2021 compared to the ~~second~~first quarter of ~~2019,~~2020, primarily as a result of foreign currency translation adjustments due to changes in the Canadian and Australian dollar exchange rates compared to the U.S. dollar. The Canadian dollar exchange rate compared to the U.S. dollar ~~decreased 4%~~increased 1% in the ~~second~~first quarter of ~~2020~~2021 compared to a ~~2% increase~~9% decrease in the ~~second~~first quarter of ~~2019.~~2020. The

Australian dollar exchange rate compared to the U.S. dollar decreased 2% in the ~~second~~first quarter of ~~2020~~2021 compared to a 1%13% decrease in the ~~second~~first quarter of ~~2019.~~2020.

Segment Results of Operations – Canadian Segment


		Three Months Ended June 30,																Three Months Ended March 31,
		2020			2019			Change				2021			2020			Change
Revenues ($ in thousands)	Revenues ($ in thousands)										Revenues ($ in thousands)
Accommodation revenue (1)	Accommodation revenue (1)	$	40,204		$	66,183		$	(25,979)		Accommodation revenue (1)	$	46,530		$	66,066		$	(19,536)
Mobile facility rental revenue (2)	Mobile facility rental revenue (2)	6,072			1,819			4,253			Mobile facility rental revenue (2)	10,499			2,508			7,991
Food service and other services revenue (3)	Food service and other services revenue (3)	6,710			9,086			(2,376)			Food service and other services revenue (3)	4,856			10,774			(5,918)
Manufacturing revenue (4)		—			1,014			(1,014)

Total revenues	Total revenues	$	52,986		$	78,102		$	(25,116)		Total revenues	$	61,885		$	79,348		$	(17,463)

Cost of sales and services ($ in thousands)	Cost of sales and services ($ in thousands)										Cost of sales and services ($ in thousands)
Accommodation cost	Accommodation cost	$	28,598		$	45,145		$	(16,547)		Accommodation cost	$	38,336		$	48,055		$	(9,719)
Mobile facility rental cost	Mobile facility rental cost	5,285			2,027			3,258			Mobile facility rental cost	6,774			3,257			3,517
Food service and other services cost	Food service and other services cost	6,163			8,466			(2,303)			Food service and other services cost	4,121			10,015			(5,894)
Manufacturing cost		141			668			(527)

Indirect other costs	Indirect other costs	2,278			2,970			(692)			Indirect other costs	2,654			2,945			(291)
Total cost of sales and services	Total cost of sales and services	$	42,465		$	59,276		$	(16,811)		Total cost of sales and services	$	51,885		$	64,272		$	(12,387)

Gross margin as a % of revenues	Gross margin as a % of revenues	19.9		%	24.1		%	(4.2)		%	Gross margin as a % of revenues	16.2		%	19.0		%	(2.8)		%

Average daily rate for lodges ~~(5)~~(4)	Average daily rate for lodges ~~(5)~~(4)	$	96		$	89		$	7		Average daily rate for lodges ~~(5)~~(4)	$	97		$	92		$	5

Total billed rooms for lodges ~~(6)~~(5)	Total billed rooms for lodges ~~(6)~~(5)	409,897			739,627			(329,730)			Total billed rooms for lodges ~~(6)~~(5)	480,066			708,323			(228,257)

Average Canadian dollar to U.S. dollar	Average Canadian dollar to U.S. dollar	$	0.72		$	0.75		$	(0.03)		Average Canadian dollar to U.S. dollar	$	0.790		$	0.745		$	0.045

(1)Includes revenues related to lodge rooms and hospitality services for owned rooms for the periods presented.

(2)Includes revenues related to mobile ~~camps~~assets for the periods presented.

(3)Includes revenues related to food services, laundry and water and wastewater treatment services for the periods presented.

(4)~~Includes revenues related to modular construction and manufacturing services for the periods presented.~~

~~(5)~~Average daily rate is based on billed rooms and accommodation revenue.

~~(6)~~(5)Billed rooms ~~represent~~represents total billed days for owned assets for the periods presented.

Our Canadian segment reported revenues in the ~~second~~first quarter of ~~2020~~2021 that were ~~$25.1~~$17.5 million, or ~~32%~~22%, lower than the ~~second~~first quarter of ~~2019.~~2020. The ~~weakening~~strengthening of the average exchange ~~rates~~rate for the Canadian dollar relative to the U.S. dollar by 4%6% in the ~~second~~first quarter of 2021 compared to the first quarter of 2020 ~~compared to the second quarter of 2019~~ resulted in a ~~$1.9~~$3.7 million period-over-period ~~decrease~~increase in revenues. Excluding the impact of the ~~weaker~~stronger Canadian exchange ~~rates,~~rate, the segment experienced a ~~30%~~26% decrease in revenues. This decrease was driven by ~~lower~~reduced occupancy at ~~oil sands~~our lodges ~~where billed rooms were down 45% year-over-year, and reduced food services activity. These decreases were both~~ related to the COVID-19 pandemic and ~~lower oil prices. Additionally, revenue was negatively impacted by~~ reduced ~~manufacturing~~food services activity, as ~~2019 included two projects that did not recur~~an overflow site supporting a LNG-related project in ~~2020.~~2020 is no longer required. Partially offsetting these items, revenue was favorably impacted by increased mobile ~~camp~~asset activity from a pipeline project.

Our Canadian segment cost of sales and services decreased ~~$16.8~~$12.4 million, or ~~28%~~19%, in the ~~second~~first quarter of ~~2020~~2021 compared to the ~~second~~first quarter of ~~2019.~~2020. The ~~weakening~~strengthening of the average exchange ~~rates~~rate for the Canadian dollar relative to the U.S. dollar by 4%6% in the ~~second~~first quarter of 2021 compared to the first quarter of 2020 ~~compared to the second quarter of 2019~~ resulted in a ~~$1.5~~$3.1 million period-over-period ~~decrease~~increase in cost of sales and services. Excluding the impact of the ~~weaker~~stronger Canadian exchange ~~rates,~~rate, the decreased cost of sales and services was driven by ~~lower~~reduced occupancy at our ~~oil sands~~ lodges ~~and reduced food services activity. These decreases were both~~ related to the COVID-19 pandemic and ~~lower oil prices. Additionally, lower costs resulted from~~ reduced ~~indirect other costs due to~~food services activity, as an overflow site supporting a ~~continued focus on cost containment and operational efficiencies,~~LNG-related project in 2020 is no longer required. These decreases were partially offset by increased mobile asset activity from a pipeline project and increased costs related to enhanced safety measures implemented during the COVID-19 ~~pandemic and increased mobile camp activity.~~pandemic.

Our Canadian segment gross margin as a percentage of revenues decreased from ~~24.1%~~19.0% in the ~~second~~first quarter of ~~2019~~2020 to ~~19.9%~~16.2% in the ~~second~~first quarter of ~~2020.~~2021. This was primarily driven by increased costs related to enhanced safety measures implemented during the COVID-19 pandemic, as well as reduced operating efficiencies at our lodges due to lower ~~occupancy.~~occupancy, partially offset by increased mobile asset activity and related operating efficiencies.

Segment Results of Operations – Australian Segment


		Three Months Ended June 30,																Three Months Ended March 31,
		2020			2019			Change				2021			2020			Change
Revenues ($ in thousands)	Revenues ($ in thousands)										Revenues ($ in thousands)
Accommodation revenue (1)	Accommodation revenue (1)	$	34,933		$	30,996		$	3,937		Accommodation revenue (1)	$	33,675		$	32,585		$	1,090
Food service and other services revenue (2)	Food service and other services revenue (2)	22,138			$	—		$	22,138		Food service and other services revenue (2)	25,962			$	16,528		$	9,434
Total revenues	Total revenues	$	57,071		$	30,996		$	26,075		Total revenues	$	59,637		$	49,113		$	10,524

Cost of sales ($ in thousands)
Cost of sales and services ($ in thousands)											Cost of sales and services ($ in thousands)
Accommodation cost	Accommodation cost	$	15,269		$	15,465		$	(196)		Accommodation cost	$	17,105		$	14,995		$	2,110
Food service and other services cost	Food service and other services cost	18,759			—			18,759			Food service and other services cost	24,297			13,707			10,590
Indirect other cost	Indirect other cost	885			590			295			Indirect other cost	1,501			851			650
Total cost of sales and services	Total cost of sales and services	$	34,913		$	16,055		$	18,858		Total cost of sales and services	$	42,903		$	29,553		$	13,350

Gross margin as a % of revenues	Gross margin as a % of revenues	38.8		%	48.2		%	(9.4)		%	Gross margin as a % of revenues	28.1		%	39.8		%	(11.8)		%

Average daily rate for villages (3)	Average daily rate for villages (3)	$	70		$	74		$	(4)		Average daily rate for villages (3)	$	79		$	69		$	10

Total billed rooms for villages (4)	Total billed rooms for villages (4)	502,392			416,416			85,976			Total billed rooms for villages (4)	424,666			471,840			(47,174)

Australian dollar to U.S. dollar	Australian dollar to U.S. dollar	$	0.66		$	0.70		$	(0.04)		Australian dollar to U.S. dollar	$	0.773		$	0.658		$	0.115

(1)Includes revenues related to village rooms and hospitality services for owned rooms for the periods presented.

(2)Includes revenues related to food services and other services, including facilities management for the periods presented.

(3)Average daily rate is based on billed rooms and accommodation revenue.

(4)Billed rooms represent total billed days for owned assets for the periods presented.

Our Australian segment reported revenues in the ~~second~~first quarter of ~~2020~~2021 that were ~~$26.1~~$10.5 million, or ~~84%~~21%, higher than the ~~second quarter of 2019. Action contributed $22.1 million in revenues in the second~~first quarter of 2020. The ~~weakening~~strengthening of the average exchange ~~rates~~rate for Australian dollars relative to the U.S. dollar by 6%17% in the ~~second~~first quarter of 2021 compared to the first quarter of 2020 ~~compared to the second quarter of 2019~~ resulted in a ~~$2.2~~$8.9 million period-over-period ~~decrease~~increase in ~~revenues and a $5 reduction~~revenues. Accordingly, the increase in the average daily ~~rate.~~rate is entirely attributable to the strengthening of the Australia dollar. Excluding the impact of the ~~weaker~~stronger Australian exchange ~~rates,~~rate, the Australian segment experienced ~~an 96%~~a 3% increase in revenues largely due to ~~the Action acquisition and~~ increased occupancy ofat our ~~Bowen Basin~~integrated services villages, partially offset by decreased activity at our Bowen Basin and Western Australia villages.

Our Australian segment cost of sales and services increased ~~$18.9~~$13.4 million, or ~~117%~~45%, in the ~~second~~first quarter of 2021 compared to the first quarter of 2020. The strengthening of the average exchange rate for Australian dollars relative to the U.S. dollar by 17% in the first quarter of 2021 compared to the first quarter of 2020 ~~compared to~~resulted in a $6.4 million period-over-period increase in cost of sales and services. Excluding the ~~second quarter~~impact of ~~2019. The~~the stronger Australian exchange rate, the increase in cost of sales and services was largely driven by ~~the Action acquisition. Increases also related to~~ increased occupancy at our ~~Bowen Basin~~integrated services villages and increased staff costs as a result of a hospitality labor shortage in Australia, which ~~were entirely offset~~has been exacerbated by ~~decreased activity at our Western Australia villages, additional accretion expense in 2019 related~~state and international border closures due to the COVID-19 pandemic. State and international border closures have affected the number of staff available which has subsequently led to an ~~asset retirement obligation at one of our Australia villages~~increased reliance on more expensive temporary labor hire resources and ~~the weakening of the Australian dollar.~~has placed upward pressure on wages for permanent staff as competitors compete for a smaller labor pool.

Our Australian segment gross margin as a percentage of revenues decreased to ~~38.8%~~28.1% in the ~~second~~first quarter of ~~2020~~2021 from ~~48.2%~~39.8% in the ~~second~~first quarter of ~~2019.~~2020. This was primarily driven by ~~Action,~~our integrated services business, which has a service-only business model, and therefore results in lower overall gross margins than the accommodation business ~~partially offset by improved margins~~and reduced occupancy at our Bowen Basin ~~villages as a result~~and Western Australia villages. The gross margin has also been negatively impacted by the increased cost of ~~increased occupancy.~~temporary labor due to ongoing labor shortages.

Segment Results of Operations – U.S. Segment


		Three Months Ended June 30,																Three Months Ended March 31,
		2020			2019			Change				2021			2020			Change
Revenues ($ in thousands)	Revenues ($ in thousands)	$	4,645		$	13,055		$	(8,410)		Revenues ($ in thousands)	$	3,908		$	10,331		$	(6,423)

Cost of sales ($ in thousands)	Cost of sales ($ in thousands)	$	5,755		$	9,909		$	(4,154)		Cost of sales ($ in thousands)	$	5,022		$	9,488		$	(4,466)

Gross margin as a % of revenues	Gross margin as a % of revenues	(23.9)		%	24.1		%	(48.0)		%	Gross margin as a % of revenues	(28.5)		%	8.2		%	(36.7)		%

Our U.S. segment reported revenues in the ~~second~~first quarter of ~~2020~~2021 that were ~~$8.4~~$6.4 million, or ~~64%~~62%, lower than the ~~second~~first quarter of 2019. This was primarily due to reduced occupancy at our West Permian, Killdeer and Acadian Acres lodges, reduced U.S. drilling activity affecting our wellsite business and reduced activity in our offshore rental business, all resulting from the COVID-19 pandemic and lower oil prices.

Our U.S. segment cost of sales decreased $4.2 million, or 42%, in the second quarter of 2020 compared to the second quarter of 2019. The decrease was driven by reduced occupancy at our West Permian and Killdeer lodges, reduced U.S. drilling activity affecting our wellsite business and reduced activity in our offshore rental business.

Our U.S. segment gross margin as a percentage of revenues decreased from 24.1% in the second quarter of 2019 to (23.9)% in the second quarter of 2020 primarily due to reduced activity in all areas of the business and reduced operating efficiencies at lower activity levels.

~~Results of Operations– Six Months Ended June 30, 2020Compared to Six Months Ended June 30, 2019~~

Six Months Ended
June 30,
2020 2019 Change
($ in thousands)
Revenues
Canada $ 132,334 $ 144,872 $ (12,538)
Australia 106,184 59,417 46,767
U.S. and other 14,976 26,414 (11,438)
Total revenues 253,494 230,703 22,791
Costs and expenses
Cost of sales and services
Canada 106,737 113,923 (7,186)
Australia 64,466 31,054 33,412
U.S. and other 15,243 19,893 (4,650)
Total cost of sales and services 186,446 164,870 21,576
Selling, general and administrative expenses 25,427 28,626 (3,199)
Depreciation and amortization expense 47,707 61,778 (14,071)
Impairment expense 144,120 5,546 138,574
Other operating expense (income) 704 (168) 872
Total costs and expenses 404,404 260,652 143,752
Operating loss (150,910) (29,949) (120,961)
Interest expense and income, net (9,429) (13,306) 3,877
Other income 12,667 4,033 8,634
Loss before income taxes (147,672) (39,222) (108,450)
Income tax benefit 8,689 7,334 1,355
Net loss (138,983) (31,888) (107,095)
Less: Net income attributable to noncontrolling interest 480 — 480
Net loss attributable to Civeo Corporation (139,463) (31,888) (107,575)
Dividends attributable to preferred shares 939 920 19
Net loss attributable to Civeo common shareholders $ (140,402) $ (32,808) $ (107,594)

We reported net loss attributable to Civeo for the six months ended June 30, 2020 of $140.4 million, or $0.83 per diluted share. As further discussed below, net loss included (i) a $93.6 million pre-tax loss ($93.6 million after-tax, or $0.55 per diluted share) resulting from the impairment of goodwill in our Canadian reporting unit included in Impairment expense, (ii) a $38.1 million pre-tax loss ($38.1 million after-tax, or $0.23 per diluted share) resulting from the impairment of long-lived assets in our Canadian reporting unit included in Impairment expense and (iii) a $12.4 million pre-tax loss ($12.4 million after-tax, or $0.07 per diluted share) resulting from the impairment of long-lived assets in our U.S. reporting unit included in Impairment expense. Net loss was partially offset by $4.7 million ($4.7 million after-tax, or $0.03 per diluted share) of income associated with the settlement of a representations and warranties claim related to the Noralta acquisition included in Other income.

We reported net loss attributable to Civeo for the six months ended June 30, 2019 of $32.8 million, or $(0.20) per diluted share. As further discussed below, net loss included a $5.5 million pre-tax loss ($5.5 million after-tax, or $0.03 per diluted share) resulting from the impairment of fixed assets included in Impairment expense.

~~Revenues.~~ Consolidated revenues increased $22.8 million, or 10%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019. This increase was primarily due to higher revenues in Australia due to the Action acquisition completed on July 1, 2019, increased occupancy at our Bowen Basin villages and at our Sitka Lodge, as well as higher mobile camp revenues in Canada related to a pipeline project. These items were partially offset by lower revenue from reduced occupancy at our north oil sands lodges in Canada resulting from the COVID-19 pandemic and lower oil prices. Additionally, lower activity levels in certain markets in the U.S. and weaker Canadian and Australian dollars relative to the U.S. dollar in the six months ended June 30, 2020 compared to the six months ended June 30, 2019 also offset the increased revenues. See the discussion of segment results of operations below for further information.

~~Cost of Sales and Services.~~ Our consolidated cost of sales and services increased $21.6 million, or 13%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily due to the Action acquisition and increased occupancy at our Bowen Basin villages in Australia and at our Sitka Lodge as well as higher cost of sales and services in Canada due to increased mobile camp activity from a pipeline project. These items were partially offset by decreased cost of sales and services due to reduced occupancy at our north oil sands lodges in Canada resulting from the COVID-19 pandemic and lower oil prices. Additionally, lower activity levels in certain markets in the U.S. and weaker Canadian and Australian dollars relative to the U.S. dollar in the six months ended June 30, 2020 compared to the six months ended June 30, 2019 offset the increased cost of sales and services. See the discussion of segment results of operations below for further information.

~~Selling, General and Administrative Expenses.~~ ~~SG&A expense decreased $3.2 million, or 11%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019.~~2020. This decrease was ~~primarily~~ due to lower share-based compensation expense, partially offset by higher incentive compensation costs and professional fees. The decrease in share-based compensation was due to a reduction in the amount of phantom share awards outstanding and the reduction in our stock price during the six months ended June 30, 2020 compared to the six months ended June 30, 2019.

~~Depreciation and Amortization Expense.~~ Depreciation and amortization expense decreased $14.1 million, or 23%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019. The decrease was primarily due to (1) certain assets and intangibles becoming fully depreciated during 2019, (2) the extension of the remaining life of certain long-lived accommodation assets in Canada during the fourth quarter of 2019, (3) the impairment of certain long-lived assets in Canada and the U.S. during the first quarter of 2020 and (4) weaker Canadian and Australian dollars relative to the U.S. dollar in the six months ended June 30, 2020 compared to the six months ended June 30, 2019. These items were partially offset by additional depreciation and intangible amortization expense related to our acquisition in 2019.

~~Impairment Expense.~~ ~~Impairment expense of $144.1 million in the six months ended June 30, 2020 included the following items:~~

•~~Pre-tax impairment expense of $93.6 million related to the impairment of goodwill in our Canadian reporting unit.~~

•~~Pre-tax impairment expense of $38.1 million associated with long-lived assets in our Canadian reporting unit.~~

•~~Pre-tax impairment expense of $12.4 million associated with long-lived assets in our U.S. reporting unit.~~

~~Impairment expense of $5.5 million in the six months ended June 30, 2019 was associated with long-lived assets in our Australian segment.~~

~~See Note 6 - Impairment Charges to the notes to the unaudited consolidated financial statements included in Item 1 of this quarterly report for further discussion.~~

~~OperatingIncome (Loss).~~ Consolidated operating loss increased $121.0 million, or 404%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019 primarily due to impairments of goodwill and long-lived assets, partially offset by increased activity levels in Australia, as well as lower depreciation and amortization expense.

~~Interest Expense and Income, net.~~ Net interest expense decreased by $3.9 million, or 29%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019 primarily related to lower average debt levels and lower interest rates on term loan and revolving credit facility borrowings during 2020 compared to 2019.

~~Other Income.~~ Consolidated other income increased $8.6 million, or 214%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily due to $4.7 million of other income associated with the settlement of a representations and warranties claim related to the Noralta acquisition, $6.2 million of other income related to proceeds from the CEWS and a higher gain on sale of assets compared to the first half of 2019. The first half of 2019 included $2.6 million of other income related to proceeds from an insurance claim associated with the closure of a lodge in 2018 for maintenance-related operational issues.

~~Income Tax Benefit.~~ Our income tax benefit for the six months ended June 30, 2020 totaled $8.7 million, or 5.9% of pretax loss, compared to a benefit of $7.3 million, or 18.7% of pretax loss, for the six months ended June 30, 2019. Our effective tax rate for the six months ended June 30, 2020 was impacted by a deferred tax benefit of $9.6 million offset by an increase of $0.7 million in the valuation allowance in Canada. For the six months ended June 30, 2020, Canada and the U.S. were considered loss jurisdictions for tax accounting purposes and were removed from the annual effective tax rate computation

for purposes of computing the interim tax provision. Although Australia is not considered a loss jurisdiction for the six months ended June 30, 2020, our effective tax rate is impacted by utilization of deferred tax assets and a release of the corresponding valuation allowance in Australia, resulting in no income tax expense for that jurisdiction. For the six months ended June 30, 2019, Australia and the U.S. were considered loss jurisdictions for tax accounting purposes and were removed from the annual effective tax rate computation for purposes of computing the interim tax provision.

~~Other ComprehensiveIncome(Loss).~~ Other comprehensive income decreased $25.6 million in the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily as a result of foreign currency translation adjustments due to changes in the Canadian and Australian dollar exchange rates compared to the U.S. dollar. The Canadian dollar exchange rate compared to the U.S. dollar decreased 5% in the six months ended June 30, 2020 compared to a 4% increase in the six months ended June 30, 2019. The Australian dollar exchange rate compared to the U.S. dollar decreased 2% in the six months ended June 30, 2020 compared to a 1% decrease in the six months ended June 30, 2019.

~~Segment Results of Operations~~–~~Canadian Segment~~

Six Months Ended
June 30,
2020 2019 Change
Revenues ($ in thousands)
Accommodation revenue (1) $ 106,270 $ 123,835 $ (17,565)
Mobile facility rental revenue (2) 8,580 2,600 5,980
Food service and other services revenue (3) 17,484 17,423 61
Manufacturing revenue (4) — 1,014 (1,014)
Total revenues $ 132,334 $ 144,872 $ (12,538)
Cost of sales and services ($ in thousands)
Accommodation cost $ 76,653 $ 87,763 $ (11,110)
Mobile facility rental cost 8,542 2,676 5,866
Food service and other services cost 16,178 16,301 (123)
Manufacturing cost 297 857 (560)
Indirect other cost 5,067 6,326 (1,259)
Total cost of sales and services $ 106,737 $ 113,923 $ (7,186)
Gross margin as a % of revenues 19.3 % 21.4 % (2.0) %
Average daily rate for lodges (5) $ 94 $ 91 $ 3
Total billed rooms for lodges (6) 1,118,220 1,365,619 (247,399)
Average Canadian dollar to U.S. dollar $ 0.73 $ 0.75 $ (0.02)

~~(1)Includes revenues related to lodge rooms and hospitality services for owned rooms for the periods presented.~~

~~(2)Includes revenues related to mobile camps for the periods presented.~~

~~(3)Includes revenues related to food services, laundry and water and wastewater treatment services for the periods presented.~~

~~(4)Includes revenues related to modular construction and manufacturing services for the periods presented.~~

~~(5)Average daily rate is based on billed rooms and accommodation revenue.~~

~~(6)Billed rooms represent total billed days for the periods presented.~~

Our Canadian segment reported revenues in the six months ended June 30, 2020 that were $12.5 million, or 9%, lower than the six months ended June 30, 2019. The weakening of the average exchange rates for the Canadian dollar relative to the U.S. dollar by 2% in the six months ended June 30, 2020 compared to the six months ended June 30, 2019 resulted in a $2.6 million period-over-period decrease in revenues. Excluding the impact of the weaker Canadian exchange rates, the segment experienced a 7% decrease in revenues. This decrease was driven by reduced occupancy at our lodges in the north oil sands region related to lower oil prices and the COVID-19 pandemic. Additionally, revenue was negatively impacted by reduced manufacturing revenue as 2019 included two projects that did not recur in 2020. Partially offsetting these items, revenue was favorably impacted by higher occupancy at our Sitka Lodge related to an LNG project and increased mobile camp activity from a pipeline project.

Our Canadian segment cost of sales and services decreased $7.2 million, or 6%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019. The weakening of the average exchange rates for the Canadian dollar relative to the U.S. dollar by 2% in the six months ended June 30, 2020 compared to the six months ended June 30, 2019 resulted in a $2.2 million period-over-period decrease in cost of sales and services. Excluding the impact of the weaker Canadian exchange rates, the decreased cost of sales and services was driven by reduced occupancy at our lodges in the north oil sands region and reduced indirect other costs from a continued focus on cost containment and operational efficiencies. These decreases were partially offset by higher occupancy at our Sitka Lodge, as well as increased mobile camp activity from a pipeline project and increased costs related to enhanced measures during the COVID-19 pandemic.

Our Canadian segment gross margin as a percentage of revenues decreased from 21.4% in the six months ended June 30, 2019 to 19.3% in the six months ended June 30, 2020. This was primarily driven by increased costs related to enhanced measures during the COVID-19 pandemic, as well as reduced operating efficiencies due to lower occupancy.

~~Segment Results of Operations~~–~~AustralianSegment~~

Six Months Ended
June 30,
2020 2019 Change
Revenues ($ in thousands)
Accommodation revenue (1) $ 67,518 $ 59,417 $ 8,101
Food service and other services revenue (2) 38,666 — 38,666
Total revenues $ 106,184 $ 59,417 $ 46,767
Cost of sales ($ in thousands)
Accommodation cost $ 30,264 $ 29,862 $ 402
Food service and other services cost 32,466 — 32,466
Indirect other cost 1,736 1,192 544
Total cost of sales and services $ 64,466 $ 31,054 $ 33,412
Gross margin as a % of revenues 39.3 % 47.7 % (8.4) %
Average daily rate for villages (3) $ 69 $ 74 $ (5)
Total billed rooms for villages (4) 974,232 798,997 175,235
Australian dollar to U.S. dollar $ 0.66 $ 0.71 $ (0.05)

~~(1)Includes revenues related to village rooms and hospitality services for owned rooms for the periods presented.~~

~~(2)Includes revenues related to food services and other services, including facilities management for the periods presented.~~

~~(3)Average daily rate is based on billed rooms and accommodation revenue.~~

~~(4)Billed rooms represent total billed days for the periods presented.~~

Our Australian segment reported revenues in the six months ended June 30, 2020 that were $46.8 million, or 79%, higher than the six months ended June 30, 2019. Action contributed $38.7 million in revenues in the six months ended June 30, 2020. The weakening of the average exchange rates for Australian dollars relative to the U.S. dollar by 7% in the six months ended June 30, 2020 compared to the six months ended June 30, 2019 resulted in a $5.0 million period-over-period decrease in revenues and a $5 reduction in the average daily rate. Excluding the impact of the weaker Australian exchange rates, the Australian segment experienced an 92% increase in revenues primarily due to the Action acquisition. In addition, increased activity at our Bowen Basin villages was partially offset by decreased activity at our Western Australia villages.

Our Australian segment cost of sales increased $33.4 million, or 108%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019. The increase was primarily driven by the Action acquisition. Increases related to increased activity at our Bowen Basin villages were almost entirely offset by decreased activity at our Western Australia villages and the weakening of the Australian dollar.

Our Australian segment gross margin as a percentage of revenues decreased to 39.3% in the six months ended June 30, 2020 from 47.7% in the six months ended June 30, 2019. This was primarily driven by Action, which has a service-only business model and therefore results in lower overall gross margins than the accommodation business, partially offset by improved margins at our Bowen Basin villages as a result of increased occupancy.

~~Segment Results of Operations – U.S. Segment~~

Six Months Ended
June 30,
2020 2019 Change
Revenues ($ in thousands) $ 14,976 $ 26,414 $ (11,438)
Cost of sales ($ in thousands) $ 15,243 $ 19,893 $ (4,650)
Gross margin as a % of revenues (1.8) % 24.7 % (26.5) %

Our U.S. segment reported revenues in the six months ended June 30, 2020 that were $11.4 million, or 43%, lower than the six months ended June 30, 2019. This was primarily due to reduced occupancy at our West Permian, Killdeer and Acadian Acres lodges, reduced U.S. drilling activity in the Bakken, Rockies and the Mid-Continent market affecting our wellsite business, partially offset by increased activity in the West Permian market positively affecting our wellsite business.

~~Our U.S. segment cost of sales decreased $4.7 million, or 23%, in the six months ended June 30, 2020 compared to the six months ended June 30, 2019. The decrease was driven by~~ reduced occupancy at our West Permian and Killdeer lodges, reduced U.S. drilling activity in the Bakken, Rockies, Mid-Continent and ~~the Mid-Continent~~West Permian markets affecting our wellsite business ~~partially offset by increased~~and reduced activity in our offshore fabrication business as a project was completed in the first quarter of 2020.

Our U.S. segment cost of sales decreased $4.5 million, or 47%, in the first quarter of 2021 compared to the first quarter of 2020. This decrease was due to reduced occupancy at our West Permian ~~market positively~~and Killdeer lodges, reduced U.S. drilling activity in the Bakken, Rockies, Mid-Continent and West Permian markets affecting our wellsite ~~business.~~business and reduced activity in our offshore fabrication business as a project was completed in the first quarter of 2020.

Our U.S. segment gross margin as a percentage of revenues decreased from ~~24.7%~~8.2% in the ~~six months ended June 30, 2019~~first quarter of 2020 to ~~(1.8)~~(28.5)% in the ~~six months ended June 30, 2020~~first quarter of 2021 primarily due to reduced activity at our lodges, ~~and certain~~ wellsite markets and offshore fabrication business and reduced operating efficiencies at lower activity levels.

Liquidity and Capital Resources

Our primary liquidity needs are to fund capital expenditures, which in the past have included expanding and improving our hospitality services, developing new lodges and villages, purchasing or leasing land, and for general working capital needs. In addition, capital has been used to repay debt and fund strategic business ~~acquisitions and pay dividends.~~acquisitions. Historically, our primary sources of funds have been available cash, cash flow from operations, borrowings under our Credit Agreement and proceeds from equity issuances. In the future, we may seek to access the debt and equity capital markets from time to time to raise additional capital, increase liquidity, fund acquisitions, refinance debt or retire preferred shares.

The following table summarizes our consolidated liquidity position as of ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 (in thousands):


		June 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
Lender commitments (1)	Lender commitments (1)	$	263,500	$	263,500	Lender commitments (1)	$	167,300	$	167,300
Reductions in availability (2)		—		(6,591)

Borrowings against revolving credit capacity	Borrowings against revolving credit capacity	(101,998)		(134,117)		Borrowings against revolving credit capacity	(57,063)		(63,556)
Outstanding letters of credit	Outstanding letters of credit	(2,623)		(2,031)		Outstanding letters of credit	(3,280)		(4,487)
Unused availability	Unused availability	158,879		120,761		Unused availability	106,957		99,257
Cash and cash equivalents	Cash and cash equivalents	7,311		3,331		Cash and cash equivalents	5,455		6,155
Total available liquidity	Total available liquidity	$	166,190	$	124,092	Total available liquidity	$	112,412	$	105,412

(1)~~We also have a A$2.0 million~~As of March 31, 2021 and December 31, 2020, we had two bank guarantee ~~facility.~~facilities totaling A$3.0 million which mature on May 31, 2021. We had bank guarantees of A$~~0.7~~0.9 million and A$0.8 million under ~~this facility~~these facilities outstanding as of ~~both June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively.

~~(2)~~As of June 30, 2020, there were no reductions in our availability under the Credit Agreement. As of December 31, 2019, $6.6 million of our borrowing capacity under the Credit Agreement could not be utilized in order to maintain compliance with the maximum leverage ratio financial covenant in the Credit Agreement.

Cash totaling ~~$45.3~~$12.8 million was provided by operations during the ~~six~~three months ended ~~June 30, 2020,~~March 31, 2021, compared to ~~$10.0~~$20.8 million provided by operations during the ~~six~~three months ended ~~June 30, 2019.~~March 31, 2020. During the ~~six~~three months ended ~~June 30,~~March 31, 2021 and 2020, $0.1 million was used in working capital and ~~2019, $2.9~~$3.0 million was provided by working capital, ~~and $22.7 million was used in working capital,~~ respectively. The ~~increase~~decrease in cash provided by working capital in ~~2020~~2021 compared to ~~2019~~2020 is largely due to decreased accounts payable balances, partially offset by decreased accounts receivable balances in ~~Canada.~~Australia.

Cash was provided by investing activities during the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 in the amount of ~~$2.7~~$3.3 million, compared to cash used in investing activities during the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 in the amount of ~~$15.0~~$2.6 million. The ~~decrease~~increase in cash ~~used in~~provided by investing activities was primarily due to lower capital expenditures and $4.7 million of other income associated with the settlement of a representations and warranties claim related to the Noralta acquisition in the six months ended June 30, 2020, partially offset by higher proceeds from the ~~disposition~~sale of ~~property, plant~~our manufacturing facility and ~~equipment~~mobile assets in Canada during the ~~six~~three months ended ~~June 30, 2019.~~March 31, 2021. Capital expenditures totaled ~~$3.8~~$3.4 million and ~~$21.2~~$2.7 million during the ~~six~~three months ended ~~June 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively. ~~The decrease in capital expenditures from 2019 to 2020 was related primarily to the completion of the Sitka Lodge expansion, which occurred during 2019.~~

We expect our capital expenditures for ~~2020,~~2021, exclusive of any ~~expansionary spending,~~business acquisitions or any growth capital expenditures, to be approximately ~~$15~~$20 million to $25 million, which excludes any ~~expansionary~~unannounced and uncommitted projects, the spending for which is contingent on obtaining customer contracts. Whether planned expenditures will actually be spent in ~~2020~~2021 depends on industry conditions, project approvals and schedules, customer room commitments and project and construction timing. We expect to fund these capital expenditures with available cash, cash flow from operations and revolving credit borrowings under our Credit Agreement. The foregoing capital expenditure forecast does not include any funds for strategic acquisitions, which we could pursue should the economic environment in our industry improve and the transaction economics are deemed to be attractive to us. We continue to monitor the COVID-19 global pandemic and the responses thereto, the global economy, the prices of and demand for crude oil, met coal and iron ore and the resultant impact on the capital spending plans of our customers in order to plan our business activities, and we may adjust our capital expenditure plans in the ~~future as we continue to monitor the impact of COVID-19.~~future.

Net cash of ~~$43.6~~$16.7 million was used in financing activities during the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 primarily due to net repayments under our revolving credit facilities of ~~$25.6~~$6.7 million, repayments of term loan borrowings of ~~$16.5~~$8.9 million and ~~$1.5~~$1.1 million used to settle tax obligations on vested shares under our share-based compensation plans. Net cash of ~~$6.1~~$15.6 million was ~~provided by~~used in financing activities during the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 primarily due to net ~~borrowings~~repayments under our revolving credit facilities of ~~$27.8~~$6.1 million, ~~partially offset by~~ repayments of term loan borrowings of ~~$17.4~~$8.1 million and ~~$4.3~~$1.4 million used to settle tax obligations on vested shares under our share-based compensation plans.

The following table summarizes the changes in debt outstanding during the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 (in thousands):

Balance at December 31, ~~2019~~2020

~~359,080~~251,086

Borrowings under revolving credit facilities

~~122,320~~78,628

Repayments of borrowings under revolving credit facilities

~~(147,950)~~(85,319)

Repayments of term loans

~~(16,551)~~(8,872)

Translation

~~(17,369)~~2,537

Balance at ~~June 30, 2020~~March 31, 2021

~~299,530~~238,060

We believe that cash on hand and cash flow from operations will be sufficient to meet our anticipated liquidity needs in the coming 12 months. If our plans or assumptions change, including as a result of the impact of COVID-19 or the ~~historic~~ decline in the price of and demand for oil, or are inaccurate, or if we make acquisitions, we may need to raise additional capital. Acquisitions have been, and our management believes acquisitions will continue to be, an element of our long-term business strategy. The timing, size or success of any acquisition effort and the associated potential capital commitments are unpredictable and uncertain. We may seek to fund all or part of any such efforts with proceeds from debt and/or equity issuances or may issue equity directly to the sellers. Our ability to obtain capital for additional projects to implement our growth strategy over the longer term will depend on our future operating performance, financial condition and, more broadly, on the availability of equity and debt financing. Capital availability will be affected by prevailing conditions in our industry, the global economy, the global financial markets and other factors, many of which are beyond our control. In addition, any additional debt service requirements we take on could be based on higher interest rates and shorter maturities and could impose a significant

burden on our results of operations and financial condition, and the issuance of additional equity securities could result in significant dilution to shareholders.

Credit Agreement

revolving credit facility in favor of one of our Australian subsidiaries, as borrower; and (ii) a ~~$285.4~~$194.8 million term loan facility scheduled to mature on ~~November~~May 30, ~~2021~~2023 for certain lenders in favor of Civeo.

As of June 30, 2020, one lender had an outstanding Canadian term loan of $5.9 million and an outstanding Canadian revolver loan of $8.7 million that matures on November 30, 2020. One other lender had an outstanding Canadian revolver loan of $12.5 million that matures on November 30, 2020. Maturities in 2020 are not classified as current as of June 30, 2020 and DecemberMarch 31, 2019, since we are able, and have the intent, to repay the outstanding 2020 maturities by borrowing amounts equal to such maturities under our existing revolving credit facility, which matures on November 30, 2021.


~~Period Ended~~	~~Maximum Leverage Ratio~~
~~June 30, 2020 & September 30, 2020~~	~~3.75 :~~	~~1.00~~
~~December 31, 2020 & thereafter~~	~~3.50 :~~	~~1.00~~

U.S. dollar amounts outstanding under the facilities provided by the Credit Agreement bear interest at a variable rate equal to the London Inter-Bank Offered Rate (LIBOR) plus a margin of 2.25% to 4.00%, or a base rate plus 1.25% to 3.00%, in each case based on a ratio of our total debt to consolidated EBITDA (as defined in the Credit Agreement). Canadian dollar amounts outstanding bear interest at a variable rate equal to a B/A Discount Rate (as defined in the Credit Agreement) based on the Canadian Dollar Offered Rate (CDOR) plus a margin of 2.25% to 4.00%, or a Canadian Prime rate plus a margin of 1.25% to 3.00%, in each case based on a ratio of our total debt to consolidated EBITDA. Australian dollar amounts outstanding under the Credit Agreement bear interest at a variable rate equal to the Bank Bill Swap Bid Rate plus a margin of 2.25% to 4.00%, based on a ratio of our total debt to consolidated EBITDA. The future transitions from LIBOR and CDOR as interest rate benchmarks is addressed in the Credit Agreement and at such time the transition from LIBOR or CDOR takes place, we will endeavor with the administrative agent to establish an alternate rate of interest to LIBOR or CDOR that gives due consideration to (1) the then prevailing market convention for determining a rate of interest for syndicated loans in the United States at such time for the replacement of LIBOR and (2) any evolving or then existing convention for similar Canadian Dollar denominated syndicated credit facilities for the replacement of CDOR.

The Credit Agreement contains customary affirmative and negative covenants that, among other things, limit or restrict: (i) indebtedness, liens and fundamental changes; (ii) asset sales; (iii) acquisitions of margin stock; (iv) specified acquisitions; (v) certain restrictive agreements; (vi) transactions with affiliates; and (vii) investments and other restricted payments, including dividends and other distributions. In addition, we must maintain an interest coverage ratio, defined as the ratio of consolidated EBITDA to consolidated interest expense, of at least 3.0 to 1.0 and our maximum leverage ratio, defined as the ratio of total debt to consolidated EBITDA, of no greater than 3.75 to 1.0 (as of June 30, 2020). As noted above, the permitted maximum leverage ratio changes over time. Following a qualified offering of indebtedness with gross proceeds in excess of $150 million, we will be required to maintain a maximum senior secured ratio less than 2.50 to 1.0. Each of the factors considered in the calculations of these ratios are defined in the Credit Agreement. EBITDA and consolidated interest, as defined, exclude goodwill and asset impairments, debt discount amortization, amortization of intangibles and other non-cash charges. We were in compliance with our covenants as of June 30, 2020.

Borrowings under the Credit Agreement are secured by a pledge of substantially all of our assets and the assets of our subsidiaries. The obligations under the Credit Agreement are guaranteed by our significant subsidiaries. As of June 30, 2020,

we had ten lenders that were parties to the Credit Agreement, with total commitments (including both revolving commitments and term commitments) ranging from $24.9 million to $85.4 million. As of June 30, 2020,2021, we had outstanding letters of credit of ~~$0.3~~$1.2 million under the U.S. facility, ~~$0.5~~$0.1 million under the Australian facility and ~~$1.8~~$2.0 million under the Canadian facility.

As of March 31, 2021 and December 31, 2020, we also had two bank guarantee facilities totaling A$3.0 million which mature on May 31, 2021. We had bank guarantees of A$0.9 million and A$0.8 million under these facilities outstanding as of March 31, 2021 and December 31, 2020, respectively.

See Note 8 – Debt to the notes to the unaudited consolidated financial statements included in Item 1 of this quarterly report for further discussion.

Dividends

The declaration and amount of all potential future dividends will be at the discretion of our Board of Directors and will depend upon many factors, including our financial condition, results of operations, cash flows, prospects, industry conditions, capital requirements of our business, covenants associated with certain debt obligations, legal requirements, regulatory constraints, industry practice and other factors the Board of Directors deems relevant. In addition, our ability to pay cash dividends on common or preferred shares is limited by covenants in the Credit Agreement. Future agreements may also limit our ability to pay dividends, and we may incur incremental taxes if we are required to repatriate foreign earnings to pay such dividends. If we elect to pay dividends in the future, the amount per share of our dividend payments may be changed, or dividends may be suspended, without advance notice. The likelihood that dividends will be reduced or suspended is increased during periods of market weakness. There can be no assurance that we will pay a dividend in the future.

The preferred shares we issued in the Noralta acquisition are entitled to receive a 2% annual dividend on the liquidation preference (initially $10,000 per share), paid quarterly in cash or, at our option, by increasing the preferred shares’ liquidation preference, or any combination thereof. Quarterly dividends were paid in-kind on ~~June 30, 2020,~~March 31, 2021, thereby increasing the liquidation preference to ~~$10,459~~$10,616 per share as of ~~June 30, 2020.~~March 31, 2021. We currently expect to pay dividends on the preferred shares for the foreseeable future through an increase in liquidation preference rather than cash.

Off-Balance Sheet Arrangements

As of ~~June 30, 2020,~~March 31, 2021, we had no off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.

Contractual Obligations

For additional information about our contractual obligations, refer to “Liquidity and Capital Resources—Contractual Obligations” in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020. As of ~~June 30, 2020,~~March 31, 2021, except for net repayments under our revolving credit facilities, there were no material changes to the disclosure regarding our contractual obligations made in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

Critical Accounting Policies

For a discussion of the critical accounting policies and estimates that we use in the preparation of our consolidated financial statements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020. These estimates require significant judgments, assumptions and estimates. We have discussed the development, selection and disclosure of these critical accounting policies and estimates with the audit committee of our Board of Directors. There have been no material changes to the judgments, assumptions and estimates upon which our critical accounting estimates are based.

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ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

Our principal market risks are our exposure to changes in interest rates and foreign currency exchange rates.

Interest Rate Risk

We have credit facilities that are subject to the risk of higher interest charges associated with increases in interest rates. As of ~~June 30, 2020,~~March 31, 2021, we had ~~$299.5~~$238.1 million of outstanding floating-rate obligations under our credit facilities. These floating-rate obligations expose us to the risk of increased interest expense in the event of increases in short-term interest rates. If floating interest rates increased by 100 basis points, our consolidated interest expense would increase by approximately ~~$3.0~~$2.4 million annually, based on our floating-rate debt obligations and interest rates in effect as of ~~June 30, 2020.~~March 31, 2021.

Foreign Currency Exchange Rate Risk

Our operations are conducted in various countries around the world, and we receive revenue and pay expenses from these operations in a number of different currencies. As such, our earnings are subject to movements in foreign currency exchange rates when transactions are denominated in (i) currencies other than the U.S. dollar, which is our reporting currency, or (ii) the functional currency of our subsidiaries, which is not necessarily the U.S. dollar. Excluding intercompany balances, our Canadian dollar and Australian dollar functional currency net assets total approximately C$~~0.1 billion~~160 million and A$~~0.3 billion,~~285 million, respectively, at ~~June 30, 2020.~~March 31, 2021. We use a sensitivity analysis model to measure the impact of a 10% adverse movement of foreign currency exchange rates against the United States dollar. A hypothetical 10% adverse change in the value of the Canadian dollar and Australian dollar relative to the U.S. dollar as of ~~June 30, 2020~~March 31, 2021 would result in translation adjustments of approximately ~~$10~~$16 million and ~~$35~~$28 million, respectively, recorded in other comprehensive loss. Although we do not currently have any foreign exchange agreements outstanding, in order to reduce our exposure to fluctuations in currency exchange rates, we may enter into foreign exchange agreements with financial institutions in the future.

ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of ~~June 30, 2020,~~March 31, 2021, at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

During the three months ended ~~June 30, 2020,~~March 31, 2021, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II -- OTHER INFORMATION

ITEM 1. Legal Proceedings

We are a party to various pending or threatened claims, lawsuits and administrative proceedings seeking damages or other remedies concerning our commercial operations, products, employees and other matters, including occasional claims by individuals alleging exposure to hazardous materials as a result of our products or operations. Some of these claims relate to matters occurring prior to our acquisition of businesses, and some relate to businesses we have sold. In certain cases, we are entitled to indemnification from the sellers of businesses, and in other cases, we have indemnified the buyers of businesses from us. Although we can give no assurance about the outcome of pending legal and administrative proceedings and the effect such outcomes may have on us, we believe that any ultimate liability resulting from the outcome of such proceedings, to the extent not otherwise provided for or covered by indemnity or insurance, will not have a material adverse effect on our consolidated financial position, results of operations or liquidity.

ITEM 1A. Risk Factors

~~There are numerous~~For additional information about our risk factors, that affect our business and results of operations, many of which are beyond our control. In addition to information set forth in this quarterly report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, you should carefully read ~~and consider “Risk~~the section entitled "Risk Factors” ~~and “Management's Discussion and Analysis of Financial Condition and Results of Operations”~~included in our Annual Report on Form 10-K for the year ended December 31, 2019 and "Risk Factors" in our Form 10-Q for the quarter ended March 31, 2020, which contain descriptions of significant factors that may cause our future operating results to differ materially from those currently expected.2020.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information about purchases of our common shares during the three months ended ~~June 30, 2020.~~March 31, 2021.

Period Total Number of Shares Purchased Average Price Paid per Share Total number of shares purchased as part of publicly announced plans or programs (3) Maximum number of shares that may yet be purchased under the plans or programs (3)
April 1, 2020 - April 30, 2020 44,247 (1) 0.37 (2) — —
May 1, 2020 - May 31, 2020 — — — —
June 1, 2020 - June 30, 2020 — — — —
Total 44,247 $0.37 — —


Period	Total Number of Shares Purchased		Average Price Paid per Share		Total number of shares purchased as part of publicly announced plans or programs (3)	Maximum number of shares that may yet be purchased under the plans or programs (3)
January 1, 2021 - January 31, 2021	—		—		—	—
February 1, 2021 - February 28, 2021	56,889	(1)	$19.57	(2)	—	—
March 1, 2021 - March 31, 2021	—		—		—	—
Total	56,889		$19.57		—	—

(1)Consists of shares surrendered to us by participants in our 2014 Equity Participation Plan to settle the participants' personal tax liabilities that resulted from the lapsing of restrictions on shares awarded to the participants under the plan.

(2)The price paid per share was based on the closing price of our common shares on ~~April 3, 2020,~~February 20, 2021, February 21, 2021 and February 25, 2021, the ~~date~~respective dates as of which the restrictions lapsed on such shares.

(3)We did not have at any time during the quarter ended ~~June 30, 2020,~~March 31, 2021, and currently do not have, a share repurchase program in place.

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ITEM 6. Exhibits

(a)INDEX OF EXHIBITS


Exhibit No.		Description

~~10.1†~~	—	~~Amended and Restated 2014 Equity Participation Plan of Civeo Corporation, as amended by Amendment No. 1, Amendment No. 2 and Amendment No. 3.~~

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

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

32.1**	—	Certification of Chief Executive Officer of Civeo Corporation pursuant to Rules 13a-14(b) or 15d-14(b) under the Securities Exchange Act of ~~1934.~~1934 and 18 U.S.C. Section 1350.

32.2**	—	Certification of Chief Financial Officer of Civeo Corporation pursuant to Rules 13a-14(b) or 15d-14(b) under the Securities Exchange Act of ~~1934.~~1934 and 18 U.S.C. Section 1350.

101.INS*	—	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH*	—	Inline XBRL Taxonomy Extension Schema Document

101.CAL*	—	Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*	—	~~XBRL~~Inline Taxonomy Extension Definition Linkbase Document

101.LAB*	—	Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*	—	Inline XBRL Taxonomy Extension Presentation Linkbase Document

104	—	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

---------


*			Filed herewith.
**			Furnished herewith.
†			~~Management contracts and compensatory plans and arrangements.~~

PLEASE NOTE: Pursuant to the rules and regulations of the Securities and Exchange Commission, we have filed or incorporated by reference the agreements referenced above as exhibits to this Quarterly Report on Form 10-Q. The agreements have been filed to provide investors with information regarding their respective terms. The agreements are not intended to provide any other factual information about Civeo or its business or operations. In particular, the assertions embodied in any representations, warranties and covenants contained in the agreements may be subject to qualifications with respect to knowledge and materiality different from those applicable to investors and may be qualified by information in confidential disclosure schedules not included with the exhibits. These disclosure schedules may contain information that modifies, qualifies and creates exceptions to the representations, warranties and covenants set forth in the agreements. Moreover, certain representations, warranties and covenants in the agreements may have been used for the purpose of allocating risk between the parties, rather than establishing matters as facts. In addition, information concerning the subject matter of the representations, warranties and covenants may have changed after the date of the respective agreement, which subsequent information may or may not be fully reflected in our public disclosures. Accordingly, investors should not rely on the representations, warranties and covenants in the agreements as characterizations of the actual state of facts about Civeo or its business or operations on the date hereof.

3933

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CIVEO CORPORATION


Date: ~~July 29, 2020~~April 30, 2021			By /s/ Carolyn J. Stone
			Carolyn J. Stone
			Senior Vice President, Chief Financial Officer and Treasurer (Duly Authorized Officer and Principal Financial Officer)

4034


	Preferred Shares (in thousands)	Common Shares (in thousands)
Balance, December 31, 2019	9,042	169,556
Stock-based compensation	—	1,022
Balance, June 30, 2020	9,042	170,578


	June 30, 2020		December 31, 2019
Canadian term loan, which matures on November 30, 2021; 3.125% of aggregate principal repayable per quarter; weighted average interest rate of 4.4% for the six-month period ended June 30, 2020 (1)	$	197,532	$	224,963

U.S. revolving credit facility, which matures on November 30, 2021), weighted average interest rate of 7.0% for the six-month period ended June 30, 2020 (1)	—		—

Canadian revolving credit facility, which matures on November 30, 2021, weighted average interest rate of 4.5% for the six-month period ended June 30, 2020 (1)	101,998		134,117

Australian revolving credit facility, which matures on November 30, 2021, weighted average interest rate of 4.2% for the six-month period ended June 30, 2020 (1)	—		—
	299,530		359,080
Less: Unamortized debt issuance costs	1,498		2,208
Total debt	298,032		356,872
Less: Current portion of long-term debt, including unamortized debt issuance costs, net	33,510		35,080
Long-term debt, less current maturities	$	264,522	$	321,792