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    CVEO   CA17878Y2078

CIVEO CORP

(CVEO)
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CIVEO : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

07/30/2021 | 03:24pm EDT
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. 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 has been driven by natural resource
production, maintenance and operation of those facilities as well as expansion
of those sites. In general, industry 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 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
                                       19
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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; British
Columbia, Canada; Queensland, Australia; and Western Australia. We derive most
of our business from natural resource companies who are developing and producing
oil sands, met coal, LNG and iron ore resources and, to a lesser extent, other
hydrocarbon and mineral resources. Approximately 67% of our revenue is generated
by our lodges in Canada and 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-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. The remainder of our revenue is
generated by our hospitality services at customer-owned locations in Canada and
Australia, mobile assets in Canada and the U.S and our lodges in the U.S.
Generally, our core Canadian oil sands and Australian mining customers make
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 have negatively impacted the
global economy. The actions taken by governments and the private-sector to
mitigate the spread of COVID-19 and the risk of infection, including
government-imposed or voluntary social distancing and quarantining, reduced
travel and remote work policies, have evolved with the introduction of
vaccination efforts, and may continue to evolve as the surfacing of virus
variants has added a degree of uncertainty to the continuing global impact of
COVID-19. 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. In mid-April 2020, OPEC+ (the combination of historical OPEC
members and other significant oil producers, such as Russia) announced
production cuts of up to approximately 10 million barrels per day. However, oil
prices remained at depressed levels throughout most of 2020, before modest
improvement late in the year and into early 2021. As global oil demand recovered
in the second quarter of 2021, oil supply did not keep up, resulting in falling
inventories and a significant increase in oil prices continuing into July 2021.
In July 2021, OPEC+ agreed to phase out 5.8 million barrels per day of oil
production cuts by September 2022.
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 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 governmental regulation. Historically, WCS has traded at a
discount to WTI, creating a "WCS Differential," due to transportation costs and
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 assets and to improve take-away capacity for
Canadian oil sands producers over the longer term. While these pipeline
projects, including the Trans Mountain Pipeline (TMX), have recently received
incremental regulatory approvals, it is still not certain if any of the proposed
pipeline projects will ultimately be completed. Certain segments of the TMX
pipeline have resumed construction without conflict at the present time. Recent
legal issues with the Canadian government and First Nation groups have been
resolved for the time being. The Canadian federal government acquired the TMX
pipeline in 2018, approved the expansion of the project and is currently working
through a revised construction timeline to adjust for recent delays related to
legal hurdles and the COVID-19 pandemic.
WCS prices in the second quarter of 2021 averaged $53.27 per barrel compared to
$19.73 in the second quarter of 2020. The WCS Differential decreased from $15.35
per barrel at the end of the fourth quarter of 2020 to $13.95 at the end of the
second quarter of 2021. In 2018, the Government of Alberta announced it would
mandate temporary curtailments of the 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 and inventory levels. Should
                                       20
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forecasts show storage inventories approaching maximum capacity, the government
may reintroduce production limits. As of July 26, 2021, the WTI price was $71.91
and the WCS price was $58.27, resulting in a WCS Differential of $13.64.
Together with the initial spread of COVID-19, the depressed price levels of both
WTI and WCS materially impacted 2020 maintenance and production spending and
activity by Canadian operators and, therefore, demand for our hospitality
services. Customers began increasing production activity in the fourth quarter
of 2020 and into the first half of 2021. Continued uncertainty, including about
the impact of COVID-19, and commodity price volatility and regulatory
complications 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 stabilize, the resulting impact could continue to negatively affect the
value of our long-lived assets.
British Columbia, Canada. Our Sitka Lodge supports the LNG Canada project and
related pipeline projects (see discussion below). From a macroeconomic
standpoint, LNG demand continued to 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.
Currently, Western Canada does not have any operational LNG export facilities.
LNG Canada (LNGC), a joint venture 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). British Columbia
LNG activity and related pipeline projects are a material driver of activity for
our Sitka Lodge, as well as for our mobile assets, which are contracted to serve
several portions of the related pipeline construction activity. The actual
timing of when revenue is realized from the 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, such as protest blockades 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, before returning to expected levels 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. In the second quarter
of 2021, this order was repealed. It was replaced with less restrictive
requirements focused on monitoring, allowing workforces to return to their
optimal sizes.
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 increased by 14.4%
during the first half of 2021 compared to the same period of 2020. As of
July 26, 2021, met coal spot prices were $215 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. In 2020, the impact of the outbreak of COVID-19 led to a high level
of uncertainty for demand of iron ore and met coal. However, due to strong
global 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 first half of 2021. An increase in global infrastructure
spending to stimulate economies is expected to support demand for raw 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 pricing. The Chinese trade embargo and volatile
Australian met coal spot pricing have created a 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.
Civeo's activity in Western Australia is driven primarily by iron ore
production, which is a key steel-making ingredient.  As of July 26, 2021, iron
ore spot prices were $197.30 per metric tonne.
Our integrated services business provides catering and managed services to the
mining industry in Western Australia. We have contracts to manage customer-owned
villages in Western Australia which primarily support iron ore mines in addition
to
                                       21
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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.
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. During 2019, the U.S. oil
rig count and associated completion activity decreased due to the oil price
decline in late 2018 and early 2019 coupled with other market dynamics
negatively impacting exploration and production (E&P) spending, finishing the
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.
Only 267 oil rigs were active at the end of 2020. As oil prices began to recover
in 2021, oil rig count and drilling activity recovered somewhat, with 372 oil
rigs active at the end of the second quarter 2021. The Permian Basin remains the
most active U.S. unconventional play, representing 63% of the oil rigs active in
the U.S. at the end of the second quarter of 2021. The lower U.S. rig count and
decline in oil prices resulted in decreased U.S. oil production from an average
of 12.2 million barrels per day in 2019 to an average of 11.3 million barrels
per day in 2020 and to an average of 11.2 million barrels per day through the
first five months of 2021. As of July 23, 2021, there were 387 active oil rigs
in the U.S. (as measured by Bakerhughes.com). With the recent volatility in oil
prices and a resulting reduction in spending by E&P companies, we exited the
Bakken and reduced our presence in the Rockies regions for our U.S. mobile
assets. Those assets were either sold or transported to our Permian Basin and
Mid-Continent district locations. This process is underway and we expect it to
be complete during the third quarter 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, met coal and iron ore pricing trends are as follows:

                                                                Average Price (1)
                                                                              Hard
                                             WTI             WCS          Coking Coal           Iron
               Quarter                      Crude           Crude          (Met Coal)           Ore
                ended                     (per bbl)       (per bbl)       (per tonne)       (per tonne)

Third Quarter through July 26, 2021 $ 72.35 $ 58.77 $

   207.69      $     209.68
              6/30/2021                       66.19           53.27            136.44            195.97
              3/31/2021                       58.13           46.28            127.95            159.83
             12/31/2020                       42.63           31.34            109.37            128.24
              9/30/2020                       40.90           31.15            113.30            116.10
              6/30/2020                       27.95           19.73            120.27             89.53
              3/31/2020                       45.38           27.92            156.17             83.57
             12/30/2019                       56.85           37.94            141.39             85.13
              9/30/2019                       56.40           43.88            160.25            101.41
              6/30/2019                       59.89           47.39            204.78             94.62
              3/31/2019                       54.87           44.49            203.30             79.26
             12/31/2018                       59.32           25.66            223.02             70.13
              9/30/2018                       69.61           41.58            188.46             61.91
              6/30/2018                       67.97           49.93            189.41             62.58


(1)Source: WTI crude prices are from U.S. Energy Information Administration (EIA), WCS crude prices and iron ore 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:
                                       22
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                                                Three Months Ended                                                         Six Months Ended
                                                     June 30,                                                                  June 30,
                           2021             2020            Change            Percentage             2021             2020            Change            Percentage
Average Canadian dollar
to U.S. dollar              $0.815           $0.722          0.09               12.8%                 $0.802           $0.733         $0.07                9.4%
Average Australian
dollar to U.S. dollar       $0.770           $0.658          0.11               17.2%                 $0.772           $0.658         $0.11               17.3%


                                                                                   As of
                                       June 30, 2021               December 31, 2020               Change                Percentage
Canadian dollar to U.S. dollar                     $0.807                         $0.785            0.02                    2.8%
Australian dollar to U.S. dollar                   $0.750                         $0.773           (0.02)                  (3.0)%



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. We currently
expect that our 2021 capital expenditures, exclusive of any business
acquisitions, will total approximately $20 million, compared to 2020 capital
expenditures of $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
2021 capital expenditures.

                                       23
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Results of Operations
Unless otherwise indicated, discussion of results for the three months ended
June 30, 2021, is based on a comparison to the corresponding period of 2020.
Results of Operations - Three Months Ended June 30, 2021 Compared to Three
Months Ended June 30, 2020

                                                                        Three Months Ended
                                                                             June 30,
                                                         2021                  2020                 Change

                                                                         ($ in thousands)
Revenues
Canada                                              $     83,281          $     52,986          $     30,295
Australia                                                 64,019                57,071                 6,948
U.S. and other                                             6,876                 4,645                 2,231
Total revenues                                           154,176               114,702                39,474
Costs and expenses
Cost of sales and services
Canada                                                    57,342                42,465                14,877
Australia                                                 44,895                34,913                 9,982
U.S. and other                                             5,765                 5,755                    10
Total cost of sales and services                         108,002                83,133                24,869
Selling, general and administrative expenses              14,703                11,490                 3,213
Depreciation and amortization expense                     21,377                22,205                  (828)
Impairment expense                                         7,935                     -                 7,935
Other operating expense (income)                              30                  (285)                  315
Total costs and expenses                                 152,047               116,543                35,504
Operating income (loss)                                    2,129                (1,841)                3,970

Interest expense, net                                     (3,399)               (3,850)                  451
Other income                                                 788                12,642               (11,854)
(Loss) income before income taxes                           (482)                6,951                (7,433)
Income tax benefit (expense)                                 492                  (122)                  614
Net income                                                    10                 6,829                (6,819)
Less: Net income attributable to noncontrolling
interest                                                      (3)                  222                  (225)
Net income attributable to Civeo Corporation                  13                 6,607                (6,594)
Less: Dividends attributable to preferred shares             480                   471                     9
Net (loss) income attributable to Civeo common
shareholders                                        $       (467)         $      6,136          $     (6,603)



We reported net loss attributable to Civeo for the quarter ended June 30, 2021
of $0.5 million, or $0.03 per diluted share. As further discussed below, net
loss included a $7.9 million pre-tax loss resulting from the impairment of fixed
assets included in Impairment expense.
We reported net income attributable to Civeo for the quarter ended June 30, 2020
of $6.1 million, or $0.37 per diluted share. As further discussed below, net
income included $4.7 million of income associated with the settlement of a
representations and warranties claim related to the Noralta acquisition included
in Other income.
Revenues. Consolidated revenues increased $39.5 million, or 34%, in the second
quarter of 2021 compared to the second quarter of 2020. This increase was
primarily due to (i) higher billed rooms at our Canadian oil sands lodges
related to turnaround activities by a number of customers, (ii) increased mobile
asset activity from a pipeline project in Canada, (iii) increased occupancy at
our Australian integrated services villages, (iv) increased activity levels in
certain U.S. markets and (v) a stronger Australian and Canadian dollar relative
to the U.S. dollar in the second quarter of 2021 compared to the second quarter
of 2020. These items were partially offset by (i) reduced occupancy at our
Canadian Sitka Lodge related to the COVID-19 pandemic and the British Columbia
health order, (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 Bowen Basin villages and Western Australia villages and (iv) decreased
activity at our U.S. wellsite business. See the discussion of segment results of
operations below for further information.
                                       24
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Cost of Sales and Services. Our consolidated cost of sales and services
increased $24.9 million, or 30%, in the second quarter of 2021 compared to the
second quarter of 2020. This increase was primarily due to (i) increased
occupancy at our Canadian oil sands lodges related to turnaround activities by a
number of customers, (ii) increased mobile asset activity from a pipeline
project in Canada, (iii) increased occupancy at our Australian integrated
services villages and increased cost of temporary labor due to ongoing labor
shortages in Australia, (iv) increased activity levels in certain U.S. markets
and (v) a stronger Australian and Canadian dollar relative to the U.S. dollar in
the second quarter of 2021 compared to the second quarter of 2020. These items
were partially offset by (i) reduced occupancy at our Canadian Sitka Lodge
related to the COVID-19 pandemic and the British Columbia health order, (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 Bowen
Basin villages and Western Australia villages and (iv) decreased activity at our
U.S. wellsite business. See the discussion of segment results of operations
below for further information.
Selling, General and Administrative Expenses. SG&A expense increased $3.2
million, or 28%, in the second quarter of 2021 compared to the second quarter of
2020. This increase was primarily due to higher incentive compensation costs,
share-based compensation expense and compensation expense. In addition, SG&A
expense increased approximately $1.0 million due to a stronger Australian and
Canadian dollar relative to the U.S. dollar in the second quarter of 2021
compared to the second quarter of 2020. The increase in share-based compensation
was due to an increase in our stock price during the second quarter of 2021
compared to the second quarter of 2020.
Depreciation and Amortization Expense. Depreciation and amortization expense
decreased $0.8 million, or 4%, in the second quarter of 2021 compared to the
second quarter of 2020. The decrease was primarily due to certain assets and
intangibles becoming fully depreciated during 2020 and the extension of the
remaining life of certain long-lived assets in the U.S. during the second
quarter of 2020. These items were partially offset by a stronger Australian and
Canadian dollar relative to the U.S. dollar in the second quarter of 2021
compared to the second quarter of 2020.
Impairment Expense. We recorded pre-tax impairment expense of $7.9 million in
the second quarter of 2021 associated with long-lived assets in our Australian
reporting unit. 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). Consolidated operating income increased $4.0 million,
or 216%, in the second quarter of 2021 compared to the second quarter of 2020,
primarily due to increased activity levels in Canada, partially offset by higher
impairment expense.
Interest Expense, net. Net interest expense decreased by $0.5 million, or 12%,
in the second quarter of 2021 compared to the second quarter of 2020, primarily
related to lower average debt levels and lower interest rates on term loan and
revolving credit facility borrowings during 2021 compared to 2020.

Other Income. Consolidated other income decreased $11.9 million in the second
quarter of 2021 compared to the second quarter of 2020. The second quarter of
2021 included $0.7 million related to proceeds from the Canada Emergency Wage
Subsidy (CEWS). The second quarter of 2020 included $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 second quarter
of 2020.

Income Tax (Expense) Benefit. Our income tax benefit for the three months ended
June 30, 2021 totaled $0.5 million, or 102.1% of pretax loss, compared to an
income tax expense of $0.1 million, or 1.8% of pretax income, for the three
months ended June 30, 2020. Our effective tax rate for both the three months
ended June 30, 2021 and June 30, 2020 was impacted by considering Canada and the
U.S. loss jurisdictions that were removed from the annual effective tax rate
computation for purposes of computing the interim tax provision. 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.

Other Comprehensive (Loss) Income. Other comprehensive income decreased $31.0
million in the second quarter of 2021 compared to the second quarter of 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 increased
1% in the second quarter of 2021 compared to a 4% decrease in the second quarter
of 2020. The Australian dollar exchange rate compared to the U.S. dollar
decreased 1% in the second quarter of 2021 compared to a 2% decrease in the
second quarter of 2020.
                                       25
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Segment Results of Operations - Canadian Segment

                                                         Three Months Ended
                                                              June 30,
                                                 2021           2020          Change
Revenues ($ in thousands)
Accommodation revenue (1)                     $ 69,759       $ 40,204       $ 29,555
Mobile facility rental revenue (2)               8,666          6,072       

2,594

Food service and other services revenue (3) 4,856 6,710

  (1,854)

Total revenues                                $ 83,281       $ 52,986       $ 30,295

Cost of sales and services ($ in thousands)
Accommodation cost                            $ 44,992       $ 28,598       $ 16,394
Mobile facility rental cost                      5,644          5,285       

359

Food service and other services cost             4,455          6,163       

(1,708)


Indirect other costs                             2,251          2,419       

(168)

Total cost of sales and services              $ 57,342       $ 42,465       

$ 14,877


Gross margin as a % of revenues                   31.1  %        19.9  %    

11.3 %


Average daily rate for lodges (4)             $     96       $     96       

$ -


Total billed rooms for lodges (5)              723,324        409,897       

313,427

Average Canadian dollar to U.S. dollar $ 0.815 $ 0.722 $ 0.093




(1)Includes revenues related to lodge rooms and hospitality services for owned
rooms for the periods presented.
(2)Includes revenues related to mobile assets for the periods presented.
(3)Includes revenues related to food services, laundry and water and wastewater
treatment services for the periods presented.
(4)Average daily rate is based on billed rooms and accommodation revenue.
(5)Billed rooms represents total billed days for owned assets for the periods
presented.

Our Canadian segment reported revenues in the second quarter of 2021 that were
$30.3 million, or 57%, higher than the second quarter of 2020. The strengthening
of the average exchange rate for the Canadian dollar relative to the U.S. dollar
by 13% in the second quarter of 2021 compared to the second quarter of 2020
resulted in a $9.6 million period-over-period increase in revenues. Excluding
the impact of the stronger Canadian exchange rate, the segment experienced a 39%
increase in revenues. This increase was driven by higher billed rooms at our oil
sands lodges related to turnaround activities by a number of customers and by
increased mobile asset activity from a pipeline project. Partially offsetting
these items, revenue was lower at our Sitka Lodge related to the COVID-19
pandemic and the British Columbia health order and from food services activity,
as an overflow site supporting a LNG-related project in 2020 is no longer
required.

Our Canadian segment cost of sales and services increased $14.9 million, or 35%,
in the second quarter of 2021 compared to the second quarter of 2020. The
strengthening of the average exchange rate for the Canadian dollar relative to
the U.S. dollar by 13% in the second quarter of 2021 compared to the second
quarter of 2020 resulted in a $6.5 million period-over-period increase in cost
of sales and services. Excluding the impact of the stronger Canadian exchange
rate, the increased cost of sales and services was driven by increased occupancy
at our oil sands lodges related to turnaround activities by a number of
customers and by increased mobile asset activity from a pipeline project.
Partially offsetting these items, cost of sales and services decreased at our
Sitka Lodge related to the COVID-19 pandemic and the British Columbia health
order and from food services activity, as an overflow site supporting a
LNG-related project in 2020 is no longer required.

Our Canadian segment gross margin as a percentage of revenues increased from
19.9% in the second quarter of 2020 to 31.1% in the second quarter of 2021. This
was primarily driven by increased operating efficiencies at our oil sands lodges
due to higher occupancy and from our increased mobile asset activity.
                                       26
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Segment Results of Operations - Australian Segment

                                                         Three Months Ended
                                                              June 30,
                                                 2021           2020          Change
Revenues ($ in thousands)
Accommodation revenue (1)                     $ 37,780       $ 34,933       $  2,847
Food service and other services revenue (2)     26,239       $ 22,138       $  4,101
Total revenues                                $ 64,019       $ 57,071       

$ 6,948


Cost of sales and services ($ in thousands)
Accommodation cost                            $ 18,082       $ 15,269       $  2,813
Food service and other services cost            25,154         18,759       

6,395

Indirect other cost                              1,659            885       

774

Total cost of sales and services              $ 44,895       $ 34,913       

$ 9,982


Gross margin as a % of revenues                   29.9  %        38.8  %    

(9.0) %


Average daily rate for villages (3)           $     81       $     70       

$ 11


Total billed rooms for villages (4)            466,298        502,392       

(36,094)


Australian dollar to U.S. dollar              $  0.770       $  0.658       

$ 0.113




(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 quarter of 2021 that were
$6.9 million, or 12%, higher than the second quarter of 2020. The strengthening
of the average exchange rate for Australian dollars relative to the U.S. dollar
by 17% in the second quarter of 2021 compared to the second quarter of 2020
resulted in a $9.4 million period-over-period increase in revenues. Accordingly,
the increase in the average daily rate is entirely attributable to the
strengthening of the Australia dollar. Excluding the impact of the stronger
Australian exchange rate, the Australian segment experienced a 4% decrease in
revenues largely due to decreased activity at our Bowen Basin villages and
Western Australia villages, partially offset by increased occupancy at our
integrated services villages.

Our Australian segment cost of sales and services increased $10.0 million, or
29%, in the second quarter of 2021 compared to the second quarter of 2020. The
strengthening of the average exchange rate for Australian dollars relative to
the U.S. dollar by 17% in the second quarter of 2021 compared to the second
quarter of 2020 resulted in a $6.6 million period-over-period increase in cost
of sales and services. Excluding the impact of the stronger Australian exchange
rate, the increase in cost of sales and services was largely driven by the
increased occupancy at our integrated services villages and increased costs of
temporary labor due to ongoing labor shortages.

Our Australian segment gross margin as a percentage of revenues decreased to
29.9% in the second quarter of 2021 from 38.8% in the second quarter of 2020.
This was primarily driven by our integrated services business, which has a
service-only business model, and therefore results in lower overall gross
margins than the accommodation business. Reduced occupancy at the Bowen Basin
villages and Western Australia villages has also impacted our Australian gross
margin. Segment gross margin has also been negatively impacted by increased
staff costs as a result of a hospitality labor shortage in Australia which has
been exacerbated by state and international border closures due to COVID-19.
State and international border closures have affected the number of staff
available which has subsequently led to an increased reliance on more expensive
temporary labor hire resources and has placed upward pressure on wages for
permanent staff as competitors compete for a small pool of labor.
                                       27
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Segment Results of Operations - U.S. Segment

                                                              Three Months Ended
                                                                   June 30,
                                                       2021          2020         Change
      Revenues ($ in thousands)                     $ 6,876       $ 4,645       $ 2,231

      Cost of sales and services ($ in thousands)   $ 5,765       $ 5,755       $    10

      Gross margin as a % of revenues                  16.2  %      (23.9) %       40.1  %



Our U.S. segment reported revenues in the second quarter of 2021 that were $2.2
million, or 48%, higher than the second quarter of 2020. This increase was due
to increased occupancy at our West Permian, Killdeer and Acadian Acres lodges
and increased activity in our offshore business from fabrication and unit sales,
partially offset by reduced U.S. drilling activity affecting our wellsite
business.

Our U.S. segment cost of sales and services slightly increased in the second
quarter of 2021 compared to the second quarter of 2020. This increase was due to
greater activity in our offshore business, partially offset by reduced costs in
our wellsite business attributable to its reduced activity.

Our U.S. segment gross margin as a percentage of revenues increased from (23.9)%
in the second quarter of 2020 to 16.2% in the second quarter of 2021 primarily
due to increased occupancy at our West Permian, Killdeer and Acadian Acres
lodges and in our offshore business from product sales, partially offset by
reduced operating efficiencies at lower activity levels in our wellsite
business.


                                       28
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Results of Operations - Six Months Ended June 30, 2021 Compared to Six Months
Ended June 30, 2020

                                                                         Six Months Ended
                                                                             June 30,
                                                         2021                  2020                 Change

                                                                         ($ in thousands)
Revenues
Canada                                              $    145,166          $    132,334          $     12,832
Australia                                                123,656               106,184                17,472
U.S. and other                                            10,784                14,976                (4,192)
Total revenues                                           279,606               253,494                26,112
Costs and expenses
Cost of sales and services
Canada                                                   109,227               106,737                 2,490
Australia                                                 87,798                64,466                23,332
U.S. and other                                            10,787                15,243                (4,456)
Total cost of sales and services                         207,812               186,446                21,366
Selling, general and administrative expenses              28,884                25,427                 3,457
Depreciation and amortization expense                     42,646                47,707                (5,061)
Impairment expense                                         7,935               144,120              (136,185)
Other operating income                                       101                   704                  (603)
Total costs and expenses                                 287,378               404,404              (117,026)
Operating loss                                            (7,772)             (150,910)              143,138

Interest expense, net                                     (6,761)               (9,429)                2,668
Other income                                               5,702                12,667                (6,965)
Loss before income taxes                                  (8,831)             (147,672)              138,841
Income tax (expense) benefit                                (584)                8,689                (9,273)
Net loss                                                  (9,415)             (138,983)              129,568
Less: Net income attributable to noncontrolling
interest                                                      56                   480                  (424)
Net loss attributable to Civeo Corporation                (9,471)             (139,463)              129,992
Less: Dividends attributable to preferred shares             958                   939                    19

Net loss attributable to Civeo common shareholders $ (10,429) $

(140,402) $ 129,973




We reported net loss attributable to Civeo for the six months ended June 30,
2021 of $10.4 million, or $0.73 per diluted share. As further discussed below,
net loss included a $7.9 million pre-tax loss resulting from the impairment of
fixed assets included in Impairment expense.
We reported net loss attributable to Civeo for the six months ended June 30,
2020 of $140.4 million, or $9.96 per diluted share. As further discussed below,
net loss included (i) a $93.6 million pre-tax loss resulting from the impairment
of goodwill in our Canada segment included in Impairment expense, (ii) a $38.1
million pre-tax loss 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 resulting from the impairment of long-lived assets in our U.S. segment
included in Impairment expense. Net loss was partially offset by $4.7 million of
income associated with the settlement of a representations and warranties claim
related to the Noralta acquisition included in Other income.
Revenues. Consolidated revenues increased $26.1 million, or 10%, in the six
months ended June 30, 2021 compared to the six months ended June 30, 2020. This
increase was primarily due to (i) increased mobile asset activity from a
pipeline project in Canada, (ii) increased occupancy at our Australian
integrated services villages and (iii) a stronger Australian and Canadian dollar
relative to the U.S. dollar in the six months ended June 30, 2021 compared to
the six months ended June 30, 2020. These items were partially offset by (i)
reduced food service activity, as an overflow site supporting a LNG-related
project in 2020 is no longer required, (ii) decreased activity at our Bowen
Basin villages and Western Australia villages and (iii) decreased activity at
our U.S. wellsite business. See the discussion of segment results of operations
below for further information.
                                       29
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Cost of Sales and Services. Our consolidated cost of sales and services
increased $21.4 million million, or 11%, in the six months ended June 30, 2021
compared to the six months ended June 30, 2020. This increase was primarily due
to (i) increased mobile asset activity from a pipeline project in Canada, (ii)
increased occupancy at our Australian integrated services villages and increased
cost of temporary labor due to ongoing labor shortages in Australia and (iii) a
stronger Australian and Canadian dollar relative to the U.S. dollar in the six
months ended June 30, 2021 compared to the six months ended June 30, 2020. These
items were partially offset by (i) reduced food service activity, as an overflow
site supporting a LNG-related project in 2020 is no longer required, (ii)
decreased activity at our Bowen Basin villages and Western Australia villages
and (iii) lower activity in certain markets in the U.S. See the discussion of
segment results of operations below for further information.
Selling, General and Administrative Expenses. SG&A expense increased $3.5
million, or 14%, in the six months ended June 30, 2021 compared to the six
months ended June 30, 2020. This increase was primarily due to higher incentive
compensation costs, share-based compensation expense and compensation expense,
partially offset by lower professional fees. The increase in share-based
compensation was due to an increase in our stock price during 2021 compared to
2020.
Depreciation and Amortization Expense. Depreciation and amortization expense
decreased $5.1 million, or 11%, in the six months ended June 30, 2021 compared
to the six months ended June 30, 2020. The decrease was primarily due to (i)
certain assets and intangibles becoming fully depreciated during 2020, (ii) the
impairment of certain long-lived assets in Canada and the U.S. during the first
quarter of 2020 and (iii) the extension of the remaining life of certain
long-lived assets in the U.S. during the second quarter of 2020. These items
were partially offset by a stronger Australian and Canadian dollar relative to
the U.S. dollar in the six months ended June 30, 2021 compared to the six months
ended June 30, 2020.
Impairment Expense. We recorded pre-tax impairment expense of $7.9 million in
the six months ended June 30, 2021 associated with long-lived assets in our
Australian reporting unit.
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.
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 Loss. Consolidated operating loss decreased $143.1 million, or 95%, in
the six months ended June 30, 2021 compared to the six months ended June 30,
2020, primarily due to impairment expense of goodwill and long-lived assets in
2020.

Interest Expense, net. Net interest expense decreased by $2.7 million, or 28%,
in the six months ended June 30, 2021 compared to the six months ended June 30,
2020, primarily related to lower average debt levels and lower interest rates on
term loan and revolving credit facility borrowings during 2021 compared to 2020.

Other Income. Consolidated other income decreased $7.0 million in the six months
ended June 30, 2021 compared to the six months ended June 30, 2020. The six
months ended June 30, 2021 included $3.5 million related to proceeds from the
CEWS and a higher gain on the sale of assets primarily related to the sale of a
manufacturing facility and mobile assets in Canada. The six months ended June
30, 2020 included $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 gain on sale of
assets related to unutilized lodge assets in Canada.

Income Tax (Expense) Benefit. Our income tax expense for the six months ended
June 30, 2021 totaled $0.6 million, or (6.6)% of pretax loss, compared to an
income tax benefit of $8.7 million, or 5.9% of pretax loss, for the six months
ended June 30, 2020. Our effective tax rate for both the six months ended June
30, 2021 and June 30, 2020 was impacted by considering Canada and the U.S. loss
jurisdictions that were removed from the annual effective tax rate computation
for purposes of computing the interim tax provision. Additionally, 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.

Other Comprehensive Loss. Other comprehensive loss decreased $16.0 million in
the six months ended June 30, 2021 compared to the six months ended June 30,
2020, primarily as a result of foreign currency translation adjustments due to
                                       30
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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
increased 3% in the six months ended June 30, 2021 compared to a 5% decrease in
the six months ended June 30, 2020. The Australian dollar exchange rate compared
to the U.S. dollar decreased 3% in the six months ended June 30, 2021 compared
to a 2% decrease in the six months ended June 30, 2020.

Segment Results of Operations - Canadian Segment

                                                            Six Months Ended
                                                                June 30,
                                                  2021             2020           Change
Revenues ($ in thousands)
Accommodation revenue (1)                     $  116,289       $  106,270       $ 10,019
Mobile facility rental revenue (2)                19,165            8,580   

10,585

Food service and other services revenue (3)        9,712           17,484         (7,772)

Total revenues                                $  145,166       $  132,334       $ 12,832

Cost of sales and services ($ in thousands)
Accommodation cost                            $   83,328       $   76,653       $  6,675
Mobile facility rental cost                       12,418            8,542   

3,876

Food service and other services cost               8,576           16,178   

(7,602)


Indirect other costs                               4,905            5,364   

(459)

Total cost of sales and services              $  109,227       $  106,737   

$ 2,490


Gross margin as a % of revenues                     24.8  %          19.3  

% 5.4 %


Average daily rate for lodges (4)             $       97       $       94   

$ 3


Total billed rooms for lodges (5)              1,203,390        1,118,220   

85,170

Average Canadian dollar to U.S. dollar $ 0.802 $ 0.733

$ 0.069




(1)Includes revenues related to lodge rooms and hospitality services for owned
rooms for the periods presented.
(2)Includes revenues related to mobile assets for the periods presented.
(3)Includes revenues related to food services, laundry and water and wastewater
treatment services for the periods presented.
(4)Average daily rate is based on billed rooms and accommodation revenue.
(5)Billed rooms represents total billed days for owned assets for the periods
presented.

Our Canadian segment reported revenues in the six months ended June 30, 2021
that were $12.8 million, or 10%, higher than the six months ended June 30, 2020.
The strengthening of the average exchange rate for the Canadian dollar relative
to the U.S. dollar by 9% in the six months ended June 30, 2021 compared to the
six months ended June 30, 2020 resulted in a $13.3 million period-over-period
increase in revenues. Excluding the impact of the stronger Canadian exchange
rate, revenue remained relatively flat; however, it was positively impacted by
higher billed rooms at our oil sands lodges related to turnaround activities by
a number of customers and by increased mobile asset activity from a pipeline
project. Partially offsetting these increases were reduced billed rooms at our
Sitka Lodge related to the COVID-19 pandemic and the British Columbia health
order and reduced food services activity, as an overflow site supporting a
LNG-related project in 2020 is no longer required.

Our Canadian segment cost of sales and services increased $2.5 million, or 2%,
in the six months ended June 30, 2021 compared to the six months ended June 30,
2020. The strengthening of the average exchange rate for the Canadian dollar
relative to the U.S. dollar by 9% in the six months ended June 30, 2021 compared
to the six months ended June 30, 2020 resulted in a $9.6 million
period-over-period increase in cost of sales and services. Excluding the impact
of the stronger Canadian exchange rate, the decreased cost of sales and services
was driven by reduced food services activity, as an overflow site supporting a
LNG-related project in 2020 is no longer required and reduced activity at our
Sitka Lodge related to the COVID-19 pandemic and British Columbia health order.
Partially offsetting these decreases were increased mobile asset activity from a
pipeline project and increased activity at our oil sands lodges related to
turnaround activities by a number of customers.

                                       31
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Our Canadian segment gross margin as a percentage of revenues increased from
19.3% in the six months ended June 30, 2020 to 24.8% in the six months ended
June 30, 2021. This was primarily driven by increased mobile asset activity and
related operating efficiencies. Accommodation gross margins were maintained at
28% with an increase in margins at our oil sands lodges related to turnaround
activities by a number of customers and related operating efficiencies at these
higher levels, offset by a reduction in margins at our Sitka Lodge related to
reduced operating efficiencies at the lower occupancy levels experienced due to
the COVID-19 pandemic and the British Columbia health order.

Segment Results of Operations - Australian Segment

                                                           Six Months Ended
                                                               June 30,
                                                  2021            2020          Change
Revenues ($ in thousands)
Accommodation revenue (1)                     $  71,455       $  67,518       $  3,937
Food service and other services revenue (2)      52,201       $  38,666       $ 13,535
Total revenues                                $ 123,656       $ 106,184     

$ 17,472


Cost of sales and services ($ in thousands)
Accommodation cost                            $  35,187       $  30,264       $  4,923
Food service and other services cost             49,451          32,466     

16,985

Indirect other cost                               3,160           1,736     

1,424

Total cost of sales and services              $  87,798       $  64,466     

$ 23,332


Gross margin as a % of revenues                    29.0  %         39.3  %  

(10.3) %


Average daily rate for villages (3)           $      80       $      69     

$ 11


Total billed rooms for villages (4)             890,964         974,232     

(83,268)


Australian dollar to U.S. dollar              $   0.772       $   0.658     

$ 0.114




(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 six months ended June 30, 2021
that were $17.5 million, or 17%, higher than the six months ended June 30, 2020.
The strengthening of the average exchange rate for Australian dollars relative
to the U.S. dollar by 17% in the six months ended June 30, 2021 compared to the
six months ended June 30, 2020 resulted in a $18.3 million period-over-period
increase in revenues. Accordingly, the increase in the average daily rate is
entirely attributable to the strengthening of the Australia dollar. Excluding
the impact of the stronger Australian exchange rate, the Australian segment
experienced a 1% decrease in revenues largely due to decreased activity at our
Bowen Basin villages and Western Australia villages, partially offset by
increased occupancy at our integrated services villages.

Our Australian segment cost of sales and services increased $23.3 million, or
36%, in the six months ended June 30, 2021 compared to the six months ended June
30, 2020. The strengthening of the average exchange rate for Australian dollars
relative to the U.S. dollar by 17% in the six months ended June 30, 2021
compared to the six months ended June 30, 2020 resulted in a $13.0 million
period-over-period increase in cost of sales and services. Excluding the impact
of the stronger Australian exchange rate, the increase in cost of sales and
services was largely driven by increased occupancy at our integrated services
villages and increased costs of temporary labor due to ongoing labor shortages.

Our Australian segment gross margin as a percentage of revenues decreased to 29%
in the six months ended June 30, 2021 from 39.3% in the six months ended June
30, 2020. This was primarily driven by our integrated services business, which
has a service-only business model, and therefore results in lower overall gross
margins than the accommodation business. Reduced occupancy at the Bowen Basin
villages and Western Australia villages has also impacted our Australian segment
gross margin. Segment gross margin has also been negatively impacted by
increased staff costs as a result of a hospitality labor shortage in Australia
which has been exacerbated by state and international border closures due to
COVID-19. State and
                                       32
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international border closures have affected the number of staff available which
has subsequently led to an increased reliance on more expensive temporary labor
hire resources and has placed upward pressure on wages for permanent staff as
competitors compete for a small pool of labor.

Segment Results of Operations - U.S. Segment

                                                               Six Months Ended
                                                                   June 30,
                                                      2021           2020          Change
     Revenues ($ in thousands)                     $ 10,784       $ 14,976       $ (4,192)

     Cost of sales and services ($ in thousands)   $ 10,787       $ 15,243       $ (4,456)

     Gross margin as a % of revenues                    0.0  %        (1.8) %         1.8  %



Our U.S. segment reported revenues in the six months ended June 30, 2021 that
were $4.2 million, or 28%, lower than the six months ended June 30, 2020. This
decrease was due to reduced U.S. drilling activity affecting our wellsite
business and reduced activity in our offshore fabrication business as a project
was completed in the first half of 2020 that did not recur to the same extent in
2021. These decreases were partially offset by increased activity at our Acadian
Acres lodge related to a client's turnaround activity.

Our U.S. segment cost of sales and services decreased $4.5 million, or 29%, in
the six months ended June 30, 2021 compared to the six months ended June 30,
2020. This decrease was due to reduced U.S. drilling activity affecting our
wellsite business, reduced activity in our offshore fabrication business as a
project was completed in the first half of 2020 that did not recur to the same
extent in 2021 and reduced costs at our West Permian lodge under a new customer
contract.

Our U.S. segment gross margin as a percentage of revenues increased 1.8% from
the six months ended June 30, 2020 to the six months ended June 30, 2021,
primarily due to improved margins at our West Permian lodge under a new customer
contract and in our offshore business from product sales, partially offset by
reduced operating efficiencies at lower activity levels in our wellsite
business.

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. 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, 2021 and December 31, 2020 (in thousands):

                                                  June 30, 2021       December 31, 2020
  Lender commitments (1)                         $      167,300      $          167,300

  Borrowings against revolving credit capacity          (52,197)                (63,556)
  Outstanding letters of credit                          (2,982)                 (4,487)
  Unused availability                                   112,121                  99,257
  Cash and cash equivalents                               4,414                   6,155
  Total available liquidity                      $      116,535      $          105,412


(1)As of June 30, 2021, we had one bank guarantee facility totaling A$1.0 million. As of December 31, 2020, we had two bank guarantee facilities totaling $3.0 million. We had bank guarantees of A$0.8 million outstanding under the facilities as of both June 30, 2021 and December 31, 2020.


Cash totaling $29.4 million was provided by operations during the six months
ended June 30, 2021, compared to $45.3 million provided by operations during the
six months ended June 30, 2020. During the six months ended June 30, 2021 and
                                       33
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2020, $13.8 million was used in working capital and $2.9 million was provided by
working capital, respectively. The decrease in cash provided by working capital
in 2021 compared to 2020 is largely due to increased accounts receivable
balances in Canada.

Cash was provided by investing activities during the six months ended June 30,
2021 in the amount of $0.5 million, compared to cash provided by investing
activities during the six months ended June 30, 2020 in the amount of $2.7
million. The decrease in cash provided by investing activities was primarily due
to $4.7 million of other income associated with the settlement of a
representations and warranties claim related to the Noralta acquisition and
lower capital expenditures during the six months ended June 30, 2020, partially
offset by higher proceeds from the sale of our manufacturing facility and mobile
assets in Canada during the six months ended June 30, 2021. Capital expenditures
totaled $6.5 million and $3.8 million during the six months ended June 30, 2021
and 2020, respectively.

We expect our capital expenditures for 2021, exclusive of any business
acquisitions or any growth capital expenditures, to be approximately $20
million, which excludes any unannounced and uncommitted projects, the spending
for which is contingent on obtaining customer contracts. Whether planned
expenditures will actually be spent in 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 transaction
economics be attractive enough to us compared to the current capital allocation
priorities of debt reduction. 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.

Net cash of $31.1 million was used in financing activities during the six months
ended June 30, 2021 primarily due to net repayments under our revolving credit
facilities of $12.1 million, repayments of term loan borrowings of $17.9 million
and $1.1 million used to settle tax obligations on vested shares under our
share-based compensation plans. Net cash of $43.6 million was used in financing
activities during the six months ended June 30, 2020 primarily due to net
repayments under our revolving credit facilities of $25.6 million, repayments of
term loan borrowings of $16.5 million and $1.5 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 months ended June 30, 2021 (in thousands):

      Balance at December 31, 2020                                                   $ 251,086
      Borrowings under revolving credit facilities                                     117,976
      Repayments of borrowings under revolving credit facilities                      (130,080)
      Repayments of term loans                                                         (17,874)
      Translation                                                                        5,725
      Balance at June 30, 2021                                                       $ 226,833



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
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.


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Credit Agreement


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

As of June 30, 2021, we had outstanding letters of credit of $0.9 million under
the U.S. facility, zero under the Australian facility and $2.1 million under the
Canadian facility.

As of June 30, 2021, we had one bank guarantee facility totaling A$1.0 million.
We had bank guarantees of A$0.8 million outstanding under the facility as of
June 30, 2021.

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, 2021, thereby increasing the liquidation
preference to $10,669 per share as of June 30, 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, 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, 2020. As of June 30, 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, 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, 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.
                                       35

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