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OFFON

CIVEO CORPORATION

(CVEO)
  Report
Delayed Quote. Delayed Nyse - 01/20 04:10:00 pm
20.42 USD   +1.24%
01/05CIVEO : 2020 Corporate Responsibility
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2021INSIDER SELL : Civeo
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2021INSIDER SELL : Civeo
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CIVEO CORP Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

10/28/2021 | 04:48pm EST
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
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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 66% 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. Global oil demand has
continued to recover throughout 2021 as COVID-19 lockdowns have begun to be
lifted and other fossil fuels are experiencing supply shortages. Oil supply has
not kept up with the increase in demand in 2021, exacerbated by the impacts of
Hurricane Ida in the Gulf of Mexico earlier this year, resulting in falling
inventories and a significant increase in oil prices continuing into October
2021. In July 2021, OPEC+ agreed to phase out 5.8 million barrels per day of oil
production cuts by September 2022. In October 2021, OPEC+ declined requests from
the Biden administration to accelerate production to help mitigate the growing
deficit between oil supply and demand and address short-term fluctuations in the
market.
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, the COVID-19 pandemic and seasonal wildfires.
WCS prices in the third quarter of 2021 averaged $57.58 per barrel compared to
an average of $31.15 in the third quarter of 2020. The WCS Differential
decreased from $15.35 per barrel at the end of the fourth quarter of 2020 to
$11.62 at the end of
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the third 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 forecasts show
storage inventories approaching maximum capacity, the government may reintroduce
production limits. As of October 25, 2021, the WTI price was $84.26 and the WCS
price was $67.80, resulting in a WCS Differential of $16.46.
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 nine months 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 7.8%
during the first nine months of 2021 compared to the same period of 2020. As of
October 25, 2021, met coal spot prices were $398 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 Chinese embargo on Australian coal continues, without any resolution
foreseeable in the near term. However, Australian met coal producers have found
new markets, including India and Europe, for their premium product. This has led
to a rebalancing of the market globally, with China relying on domestic
production along with much higher imports of U.S. and Canadian coal in 2021.
With the backdrop of continuing strong steel demand and met coal supply
constraints, the spot price for met coal has surged to record highs in October
2021. Analysts expect elevated met coal prices to persist in the short-term,
while steel demand and prices remain strong and until met coal supply issues are
resolved. Additionally, if the trade impasse with China remains unresolved,
there remains a possibility of further volatility in the short-medium term.
Civeo's activity in Western Australia is driven primarily by iron ore
production, which is a key steel-making ingredient.  As of October 22, 2021,
iron ore spot prices were $119.70 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
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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 421 oil
rigs active at the end of the third quarter 2021. The Permian Basin remains the
most active U.S. unconventional play, representing 62% of the oil rigs active in
the U.S. at the end of the third 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. For the first seven months of 2021, the average barrels per day
stayed constant at 11.3 million. As of October 25, 2021, there were 443 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. 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)

Fourth Quarter through October 25,

                2021                        $     80.83          $     66.82          $     392.80          $     124.27
              9/30/2021                           70.54                57.58                258.41                164.90
              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:
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                                                Three Months Ended                                                         Nine Months Ended
                                                   September 30,                                                             September 30,
                           2021             2020            Change            Percentage             2021             2020            Change            Percentage
Average Canadian dollar
to U.S. dollar              $0.794           $0.751          0.04                5.7%                 $0.799           $0.739         $0.06                8.1%
Average Australian
dollar to U.S. dollar       $0.735           $0.716          0.02                2.6%                 $0.759           $0.677         $0.08               12.1%


                                                                                    As of
                                      September 30, 2021             December 31, 2020               Change                Percentage
Canadian dollar to U.S. dollar                       $0.785                         $0.785              -                      -%
Australian dollar to U.S. dollar                     $0.719                         $0.773           (0.05)                  (7.0)%



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.

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

                                                                        Three Months Ended
                                                                           September 30,
                                                         2021                  2020                 Change

                                                                         ($ in thousands)
Revenues
Canada                                              $     84,057          $     71,785          $     12,272
Australia                                                 65,118                64,685                   433
U.S. and other                                             5,888                 6,387                  (499)
Total revenues                                           155,063               142,857                12,206
Costs and expenses
Cost of sales and services
Canada                                                    59,214                51,393                 7,821
Australia                                                 46,374                38,529                 7,845
U.S. and other                                             5,842                 7,512                (1,670)
Total cost of sales and services                         111,430                97,434                13,996
Selling, general and administrative expenses              17,320                13,462                 3,858
Depreciation and amortization expense                     20,282                24,820                (4,538)
Impairment expense                                             -                     -                     -
Other operating expense                                       21                    51                   (30)
Total costs and expenses                                 149,053               135,767                13,286
Operating income                                           6,010                 7,090                (1,080)

Interest expense, net                                     (3,582)               (4,029)                  447
Other (expense) income                                       364                 4,542                (4,178)
Income before income taxes                                 2,792                 7,603                (4,811)
Income tax (expense)                                      (1,770)                 (180)               (1,590)
Net income                                                 1,022                 7,423                (6,401)
Less: Net income attributable to noncontrolling
interest                                                     478                   434                    44
Net income attributable to Civeo Corporation                 544                 6,989                (6,445)
Less: Dividends attributable to preferred shares             482                   472                    10
Net income attributable to Civeo common
shareholders                                        $         62          $      6,517          $     (6,455)



We reported net income attributable to Civeo for the quarter ended September 30,
2021 of $0.1 million, or $0.00 per diluted share compared to net income
attributable to Civeo for the quarter ended September 30, 2020 of $6.5 million,
or $0.39 per diluted share.
Revenues. Consolidated revenues increased $12.2 million, or 9%, in the third
quarter of 2021 compared to the third 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 pipeline projects 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 third quarter of 2021 compared to the third quarter of
2020. These items were partially offset by (i) reduced food service activity in
Canada, as an overflow site supporting a LNG-related project in 2020 is no
longer required, (ii) decreased activity at our Bowen Basin villages and
Gunnedah Basin villages in Australia and (iii) decreased activity at our U.S.
offshore fabrication business. 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 $14.0 million, or 14%, in the third quarter of 2021 compared to the
third 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 pipeline projects
in Canada, (iii) increased occupancy at our Australian integrated services
villages and the increased cost of
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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 third quarter of 2021
compared to the third quarter of 2020. These items were partially offset by (i)
reduced food service activity in Canada, as an overflow site supporting a
LNG-related project in 2020 is no longer required and (ii) decreased activity at
our U.S. offshore fabrication business. See the discussion of segment results of
operations below for further information.
Selling, General and Administrative Expenses. SG&A expense increased $3.9
million, or 29%, in the third quarter of 2021 compared to the third quarter of
2020. This increase was primarily due to higher share-based compensation
expense, compensation expense and professional fees related to the Company's
recent debt offering efforts. The increase in share-based compensation expense
was due to an increase in our stock price during the third quarter of 2021
compared to the third quarter of 2020.
Depreciation and Amortization Expense. Depreciation and amortization expense
decreased $4.5 million, or 18%, in the third quarter of 2021 compared to the
third quarter of 2020. The decrease was primarily due to certain assets and
intangibles becoming fully depreciated during 2020, partially offset by a
stronger Australian and Canadian dollar relative to the U.S. dollar in the third
quarter of 2021 compared to the third quarter of 2020.
Operating Income (Loss). Consolidated operating income decreased $1.1 million,
or 15%, in the third quarter of 2021 compared to the third quarter of 2020,
primarily due to lower occupancy levels in Australia and higher SG&A expenses,
partially offset by increased activity levels in Canada and lower depreciation
and amortization expense in the third quarter of 2021 compared to the third
quarter of 2020.
Interest Expense, net. Net interest expense decreased by $0.4 million, or 11%,
in the third quarter of 2021 compared to the third quarter of 2020, primarily
related to lower average debt levels on credit facility borrowings during 2021
compared to 2020, partially offset by higher interest rates on credit facility
borrowings.

Other Income. Consolidated other income decreased $4.2 million in the third quarter of 2021 compared to the third quarter of 2020, primarily due to $3.6 million of other income related to proceeds from the Canada Emergency Wage Subsidy (CEWS) and higher gains on sale of assets in 2020 compared to 2021.


Income Tax (Expense) Benefit. Our income tax expense for the three months ended
September 30, 2021 totaled $1.8 million, or 63.4% of pretax income, compared to
an income tax expense of $0.2 million, or 2.4% of pretax income, for the three
months ended September 30, 2020. Our effective tax rate for both the three
months ended September 30, 2021 and 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 $23.3
million in the third quarter of 2021 compared to the third 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 decreased
3% in the third quarter of 2021 compared to a 2% increase in the third quarter
of 2020. The Australian dollar exchange rate compared to the U.S. dollar
decreased 4% in the third quarter of 2021 compared to a 4% increase in the third
quarter of 2020.
                                       26
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Segment Results of Operations - Canadian Segment

                                                         Three Months Ended
                                                            September 30,
                                                 2021           2020          Change
Revenues ($ in thousands)
Accommodation revenue (1)                     $ 60,511       $ 49,798       $ 10,713
Mobile facility rental revenue (2)              19,075         13,135       

5,940

Food service and other services revenue (3) 4,471 8,852

  (4,381)

Total revenues                                $ 84,057       $ 71,785       $ 12,272

Cost of sales and services ($ in thousands)
Accommodation cost                            $ 41,470       $ 32,490       $  8,980
Mobile facility rental cost                     11,144          8,557       

2,587

Food service and other services cost             4,007          7,595       

(3,588)


Indirect other costs                             2,593          2,751       

(158)

Total cost of sales and services              $ 59,214       $ 51,393       

$ 7,821


Gross margin as a % of revenues                   29.6  %        28.4  %    

1.1 %


Average daily rate for lodges (4)             $     98       $     96       

$ 2


Total billed rooms for lodges (5)              613,017        508,449       

104,568

Average Canadian dollar to U.S. dollar $ 0.794 $ 0.751 $ 0.043




(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 third quarter of 2021 that were
$12.3 million, or 17%, higher than the third quarter of 2020. The strengthening
of the average exchange rate for the Canadian dollar relative to the U.S. dollar
by 6% in the third quarter of 2021 compared to the third quarter of 2020
resulted in a $4.4 million period-over-period increase in revenues. Excluding
the impact of the stronger Canadian exchange rate, the segment experienced an
11% 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 pipeline projects. Partially offsetting
these items, revenue was lower 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 $7.8 million, or 15%,
in the third quarter of 2021 compared to the third quarter of 2020. The
strengthening of the average exchange rate for the Canadian dollar relative to
the U.S. dollar by 6% in the third quarter of 2021 compared to the third quarter
of 2020 resulted in a $3.2 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 pipeline projects. Partially offsetting
these items, cost of sales and services decreased 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
28.4% in the third quarter of 2020 to 29.6% in the third quarter of 2021. This
was primarily driven by increased mobile asset activity and related operating
efficiencies.
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Segment Results of Operations - Australian Segment

                                                         Three Months Ended
                                                            September 30,
                                                 2021           2020          Change
Revenues ($ in thousands)
Accommodation revenue (1)                     $ 38,104       $ 39,470       $ (1,366)
Food service and other services revenue (2)     27,014       $ 25,215       $  1,799
Total revenues                                $ 65,118       $ 64,685       

$ 433


Cost of sales and services ($ in thousands)
Accommodation cost                            $ 18,351       $ 16,401       $  1,950
Food service and other services cost            26,007         21,161       

4,846

Indirect other cost                              2,016            967       

1,049

Total cost of sales and services              $ 46,374       $ 38,529       

$ 7,845


Gross margin as a % of revenues                   28.8  %        40.4  %    

(11.7) %


Average daily rate for villages (3)           $     78       $     77       

$ 1


Total billed rooms for villages (4)            491,218        513,587       

(22,369)


Australian dollar to U.S. dollar              $  0.735       $  0.716       

$ 0.019




(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 third quarter of 2021 that were
$0.4 million, or 1%, higher than the third quarter of 2020. The strengthening of
the average exchange rate for Australian dollars relative to the U.S. dollar by
3% in the third quarter of 2021 compared to the third quarter of 2020 resulted
in a $1.6 million period-over-period increase in revenues. Excluding the impact
of the stronger Australian exchange rate, the Australian segment experienced
decreased activity at our Bowen Basin villages and Gunnedah Basin villages,
partially offset by increased occupancy at our integrated services villages.

Our Australian segment cost of sales and services increased $7.8 million, or
20%, in the third quarter of 2021 compared to the third quarter of 2020. The
strengthening of the average exchange rate for Australian dollars relative to
the U.S. dollar by 3% in the third quarter of 2021 compared to the third quarter
of 2020 resulted in a $1.2 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
28.8% in the third quarter of 2021 from 40.4% in the third 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. The integrated services business gross
margin decrease was further exacerbated as two key client contracts transferred
from construction phase to operational phase with inherently lower margins.
Reduced occupancy at the Bowen Basin villages and Western Australia villages
further impacted gross margin as efficiencies were unable to be realized with a
fixed cost structure at lower occupancy levels. 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.

                                       28
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Segment Results of Operations - U.S. Segment

                                                              Three Months Ended
                                                                 September 30,
                                                       2021          2020         Change
      Revenues ($ in thousands)                     $ 5,888       $ 6,387       $   (499)

      Cost of sales and services ($ in thousands)   $ 5,842       $ 7,512       $ (1,670)

      Gross margin as a % of revenues                   0.8  %      (17.6) %        18.4  %



Our U.S. segment reported revenues in the third quarter of 2021 that were $0.5
million, or 8%, lower than the third quarter of 2020. This decrease was due to
reduced activity in our offshore fabrication business, as two fabrication
projects were completed in the third quarter of 2020, that did not recur to the
same extent in 2021. This decrease was partially offset by increased occupancy
at our West Permian, Killdeer and Acadian Acres lodges.

Our U.S. segment cost of sales and services decreased in the third quarter of
2021 compared to the third quarter of 2020. This decrease was due to reduced
activity in our offshore fabrication business, as two fabrication projects were
completed in the third quarter of 2020, that did not recur to the same extent in
2021.

Our U.S. segment gross margin as a percentage of revenues increased from (17.6)%
in the third quarter of 2020 to 0.8% in the third quarter of 2021 primarily due
to increased occupancy at our West Permian, Killdeer and Acadian Acres lodges
and related operating efficiencies.

                                       29
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Results of Operations - Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

                                                                         Nine Months Ended
                                                                           September 30,
                                                         2021                  2020                 Change

                                                                         ($ in thousands)
Revenues
Canada                                              $    229,223          $    204,119          $     25,104
Australia                                                188,774               170,869                17,905
U.S. and other                                            16,672                21,363                (4,691)
Total revenues                                           434,669               396,351                38,318
Costs and expenses
Cost of sales and services
Canada                                                   168,441               158,130                10,311
Australia                                                134,172               102,995                31,177
U.S. and other                                            16,629                22,755                (6,126)
Total cost of sales and services                         319,242               283,880                35,362
Selling, general and administrative expenses              46,204                38,889                 7,315
Depreciation and amortization expense                     62,928                72,527                (9,599)
Impairment expense                                         7,935               144,120              (136,185)
Other operating expense                                      122                   755                  (633)
Total costs and expenses                                 436,431               540,171              (103,740)
Operating loss                                            (1,762)             (143,820)              142,058

Interest expense, net                                    (10,343)              (13,458)                3,115
Other income                                               6,066                17,209               (11,143)
Loss before income taxes                                  (6,039)             (140,069)              134,030
Income tax (expense) benefit                              (2,354)                8,509               (10,863)
Net loss                                                  (8,393)             (131,560)              123,167
Less: Net income attributable to noncontrolling
interest                                                     534                   914                  (380)
Net loss attributable to Civeo Corporation                (8,927)             (132,474)              123,547
Less: Dividends attributable to preferred shares           1,440                 1,411                    29

Net loss attributable to Civeo common shareholders $ (10,367) $

(133,885) $ 123,518




We reported net loss attributable to Civeo for the nine months ended September
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 nine months ended September
30, 2020 of $133.9 million, or $9.48 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 $38.3 million, or 10%, in the nine
months ended September 30, 2021 compared to the nine months ended September 30,
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 pipeline projects in Canada, (iii)
increased occupancy at our Australian integrated services villages and (iv) a
stronger Australian and Canadian dollar relative to the U.S. dollar in the nine
months ended September 30, 2021 compared to the nine months ended September 30,
2020. These items were partially offset by (i) lower revenue at our Sitka Lodge
related to the COVID-19 pandemic and the British Columbia health order affecting
activity in the first half of the year, (ii) reduced food service activity in
Canada, 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 and
offshore businesses. See the discussion of segment results of operations below
for further information.
                                       30
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Cost of Sales and Services. Our consolidated cost of sales and services
increased $35.4 million, or 12%, in the nine months ended September 30, 2021
compared to the nine months ended September 30, 2020. This increase was
primarily due to (i) greater activity at our Canadian oil sands lodges related
to turnaround activities by a number of customers, (ii) increased mobile asset
activity from pipeline projects in Canada, (iii) increased occupancy at our
Australian integrated services villages and increased cost of temporary labor
due to ongoing labor shortages in Australia and (iv) a stronger Australian and
Canadian dollar relative to the U.S. dollar in the nine months ended September
30, 2021 compared to the nine months ended September 30, 2020. These items were
partially offset by (i) reduced activity at our Sitka Lodge related to the
COVID-19 pandemic and the British Columbia health order affecting activity in
the first half of the year, (ii) reduced food service activity in Canada, 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) lower activity at our U.S. wellsite and offshore businesses.
See the discussion of segment results of operations below for further
information.
Selling, General and Administrative Expenses. SG&A expense increased $7.3
million, or 19%, in the nine months ended September 30, 2021 compared to the
nine months ended September 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. In addition, SG&A expense
increased approximately $2.2 million due to a stronger Australian and Canadian
dollar relative to the U.S. dollar in the nine months ended September 30, 2021
compared to the nine months ended September 30, 2020. 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 $9.6 million, or 13%, in the nine months ended September 30, 2021
compared to the nine months ended September 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 third quarter of 2020. These
items were partially offset by a stronger Australian and Canadian dollar
relative to the U.S. dollar in the nine months ended September 30, 2021 compared
to the nine months ended September 30, 2020.
Impairment Expense. We recorded pre-tax impairment expense of $7.9 million in
the nine months ended September 30, 2021 associated with long-lived assets in
our Australian reporting unit.
Impairment expense of $144.1 million in the nine months ended September 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 $142.1 million, or 99%, in the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020, primarily due to impairment expense of goodwill and long-lived assets in 2020.


Interest Expense, net. Net interest expense decreased by $3.1 million, or 23%,
in the nine months ended September 30, 2021 compared to the nine months ended
September 30, 2020, primarily related to lower average debt levels on term loan
and revolving credit facility borrowings during 2021 compared to 2020.

Other Income. Consolidated other income decreased $11.1 million in the nine
months ended September 30, 2021 compared to the nine months ended September 30,
2020. The nine months ended September 30, 2021 included $3.5 million of other
income related to proceeds from the CEWS. The nine months ended September 30,
2020 included $9.7 million of other income related to proceeds from the CEWS and
$4.7 million of other income associated with the settlement of a representations
and warranties claim related to the Noralta acquisition. In addition, 2020
included a higher gain on sale of assets compared to 2021.

Income Tax (Expense) Benefit. Our income tax expense for the nine months ended
September 30, 2021 totaled $2.4 million, or (39.0)% of pretax loss, compared to
an income tax benefit of $8.5 million, or 6.1% of pretax loss, for the nine
months ended September 30, 2020. Our effective tax rate for both the nine months
ended September 30, 2021 and 2020 was
                                       31
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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. Our effective tax rate for the nine months ended
September 30, 2021 was impacted by an increase in the valuation allowance
related to the impairment of land in Australia. Our effective tax rate for the
nine months ended September 30, 2020 was impacted by a deferred tax benefit of
$9.0 million, offset by a valuation allowance of $0.1 million, against the
Canadian net deferred tax assets.

Other Comprehensive Loss. Other comprehensive loss increased $7.4 million in the
nine months ended September 30, 2021 compared to the nine months ended September
30, 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 was
flat in the nine months ended September 30, 2021 compared to a 3% decrease in
the nine months ended September 30, 2020. The Australian dollar exchange rate
compared to the U.S. dollar decreased 7% in the nine months ended September 30,
2021 compared to a 2% increase in the nine months ended September 30, 2020.

Segment Results of Operations - Canadian Segment

                                                            Nine Months Ended
                                                              September 30,
                                                  2021             2020           Change
Revenues ($ in thousands)
Accommodation revenue (1)                     $  176,800       $  156,068       $ 20,732
Mobile facility rental revenue (2)                38,240           21,715   

16,525

Food service and other services revenue (3)       14,183           26,336        (12,153)

Total revenues                                $  229,223       $  204,119       $ 25,104

Cost of sales and services ($ in thousands)
Accommodation cost                            $  124,798       $  109,143       $ 15,655
Mobile facility rental cost                       23,562           17,099   

6,463

Food service and other services cost              12,583           23,773   

(11,190)


Indirect other costs                               7,498            8,115   

(617)

Total cost of sales and services              $  168,441       $  158,130   

$ 10,311


Gross margin as a % of revenues                     26.5  %          22.5  

% 4.0 %


Average daily rate for lodges (4)             $       97       $       95   

$ 2


Total billed rooms for lodges (5)              1,816,407        1,626,668   

189,739

Average Canadian dollar to U.S. dollar $ 0.799 $ 0.739

$ 0.060




(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 nine months ended September 30,
2021 that were $25.1 million, or 12%, higher than the nine months ended
September 30, 2020. The strengthening of the average exchange rate for the
Canadian dollar relative to the U.S. dollar by 8% in the nine months ended
September 30, 2021 compared to the nine months ended September 30, 2020 resulted
in a $17.7 million period-over-period increase in revenues. Excluding the impact
of the stronger Canadian exchange rate, the revenue increase was due to higher
billed rooms at our oil sands lodges related to turnaround activities by a
number of customers and by increased mobile asset activity from pipeline
projects. Partially offsetting these items, revenue was lower at our Sitka Lodge
related to the COVID-19 pandemic and the British Columbia health order affecting
activity in the first half of the year and from 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 $10.3 million, or 7%,
in the nine months ended September 30, 2021 compared to the nine months ended
September 30, 2020. The strengthening of the average exchange rate for the
Canadian dollar relative to the U.S. dollar by 8% in the nine months ended
September 30, 2021 compared to the nine months ended
                                       32
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September 30, 2020 resulted in a $12.7 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
activity at our Sitka Lodge related to the COVID-19 pandemic and reduced food
services activity, as an overflow site supporting a LNG related project in 2020
is no longer required. Partially offsetting these items, cost of sales and
services increased due to greater activity at our oil sands lodges related to
turnaround activities by a number of customers and by increased mobile asset
activity from pipeline projects.

Our Canadian segment gross margin as a percentage of revenues increased from
22.5% in the nine months ended September 30, 2020 to 26.5% in the nine months
ended September 30, 2021. This was primarily driven by increased mobile asset
activity and related operating efficiencies.

Segment Results of Operations - Australian Segment

                                                            Nine Months Ended
                                                              September 30,
                                                  2021             2020            Change
Revenues ($ in thousands)
Accommodation revenue (1)                     $  109,559       $  106,988       $   2,571
Food service and other services revenue (2)       79,215       $   63,881       $  15,334
Total revenues                                $  188,774       $  170,869   

$ 17,905


Cost of sales and services ($ in thousands)
Accommodation cost                            $   53,538       $   46,665       $   6,873
Food service and other services cost              75,458           53,627   

21,831

Indirect other cost                                5,176            2,703   

2,473

Total cost of sales and services              $  134,172       $  102,995   

$ 31,177


Gross margin as a % of revenues                     28.9  %          39.7  

% (10.8) %


Average daily rate for villages (3)           $       79       $       72   

$ 7


Total billed rooms for villages (4)            1,382,182        1,487,819   

(105,637)


Australian dollar to U.S. dollar              $    0.759       $    0.677   

$ 0.082




(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 nine months ended September 30,
2021 that were $17.9 million, or 10%, higher than the nine months ended
September 30, 2020. The strengthening of the average exchange rate for
Australian dollars relative to the U.S. dollar by 12% in the nine months ended
September 30, 2021 compared to the nine months ended September 30, 2020 resulted
in a $20.0 million period-over-period increase in revenues. Excluding the impact
of the stronger Australian exchange rate, the Australian segment experienced
reduced revenue 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 $31.2 million, or
30%, in the nine months ended September 30, 2021 compared to the nine months
ended September 30, 2020. The strengthening of the average exchange rate for
Australian dollars relative to the U.S. dollar by 12% in the nine months ended
September 30, 2021 compared to the nine months ended September 30, 2020 resulted
in a $14.2 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
28.9% in the nine months ended September 30, 2021 from 39.7% in the nine months
ended September 30, 2020. This decrease was primarily driven by our integrated
services business, which has a service-only business model, and therefore
results in lower overall gross margins than
                                       33
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the accommodation business. The integrated services business gross margin
decrease was further exacerbated as two key client contracts transferred from
construction phase to operational phase with inherently lower margins. Reduced
occupancy at the Bowen Basin villages and Western Australia villages, further
impacted gross margin as efficiencies were unable to be realized with a fixed
cost structure at lower occupancy levels. 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.

Segment Results of Operations - U.S. Segment

                                                               Nine Months Ended
                                                                 September 30,
                                                      2021           2020          Change
     Revenues ($ in thousands)                     $ 16,672       $ 21,363       $ (4,691)

     Cost of sales and services ($ in thousands)   $ 16,629       $ 22,755       $ (6,126)

     Gross margin as a % of revenues                    0.3  %        (6.5) %         6.8  %



Our U.S. segment reported revenues in the nine months ended September 30, 2021
that were $4.7 million, or 22%, lower than the nine months ended September 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
number of projects were completed in 2020 that did not recur to the same extent
in 2021. These decreases were partially offset by increased activity at our West
Permian, Killdeer and Acadian Acres lodges.

Our U.S. segment cost of sales and services decreased $6.1 million, or 27%, in
the nine months ended September 30, 2021 compared to the nine months ended
September 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 number of projects were completed in 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 6.8% from
the nine months ended September 30, 2020 to the nine months ended September 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 September 30, 2021 and December 31, 2020 (in thousands):

                                                                  September 30, 2021           December 31, 2020
Lender commitments                                               $          

200,000 $ 167,300


Borrowings against revolving credit capacity                               (124,595)                    (63,556)
Outstanding letters of credit                                                (2,141)                     (4,487)
Unused availability                                                          73,264                      99,257
Cash and cash equivalents                                                     4,948                       6,155
Total available liquidity                                        $           78,212          $          105,412



                                       34
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Cash totaling $63.2 million was provided by operations during the nine months
ended September 30, 2021, compared to $80.7 million provided by operations
during the nine months ended September 30, 2020. During the nine months ended
September 30, 2021 and 2020, $5.0 million was used in working capital and $4.6
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, partially offset by increased accounts payable and
accrual balances.

Cash was used in investing activities during the nine months ended September 30,
2021 in the amount of $2.1 million, compared to cash provided by investing
activities during the nine months ended September 30, 2020 in the amount of $1.7
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 nine months ended September 30, 2020,
partially offset by higher proceeds from the sale of our manufacturing facility
and mobile assets in Canada during the nine months ended September 30, 2021.
Capital expenditures totaled $9.6 million and $6.2 million during the nine
months ended September 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 $61.1 million was used in financing activities during the nine
months ended September 30, 2021 primarily due to repayments of term loan
borrowings of $117.6 million, $1.1 million used to settle tax obligations on
vested shares under our share-based compensation plans, debt issuance costs of
$4.4 million and $0.4 million used to repurchase our common shares, partially
offset by net borrowings under our revolving credit facilities of $62.5 million.
Net cash of $79.6 million was used in financing activities during the nine
months ended September 30, 2020 primarily due to net repayments under our
revolving credit facilities of $44.5 million, repayments of term loan borrowings
of $31.1 million, $1.5 million used to settle tax obligations on vested shares
under our share-based compensation plans and debt issuance costs of $2.6
million.

The following table summarizes the changes in debt outstanding during the nine months ended September 30, 2021 (in thousands):

      Balance at December 31, 2020                                                   $ 251,086
      Borrowings under revolving credit facilities                                     367,622
      Repayments of borrowings under revolving credit facilities                      (305,148)
      Repayments of term loans                                                        (117,595)
      Translation                                                                         (728)
      Balance at September 30, 2021                                                  $ 195,237



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
                                       35
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burden on our results of operations and financial condition, and the issuance of additional equity securities could result in significant dilution to shareholders.

Amended and Restated Credit Agreement


As of December 31, 2020, our Amended and Restated 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; (C) a $35.0 million senior
secured revolving credit facility in favor of one of our Australian
subsidiaries, as borrower; and (D) a $194.8 million term loan facility scheduled
to mature on May 30, 2023 for certain lenders in favor of Civeo.

New Syndicated Facility Agreement


On September 8, 2021, we entered into a new Syndicated Facility Agreement
(Credit Agreement), which, among other things, as compared to the Amended and
Restated Credit Agreement outstanding prior to the effectiveness of the Credit
Agreement provided for: (i) a $200.0 million revolving credit facility scheduled
to mature on September 8, 2025, allocated as follows: (A) a $10.0 million senior
secured revolving credit facility in favor of one of our U.S. subsidiaries, as
borrower; (B) a $155.0 million senior secured revolving credit facility in favor
of Civeo, as borrower; and (C) a $35.0 million senior secured revolving credit
facility in favor of one of our Australian subsidiaries, as borrower. In
addition, it provided for a C$100.0 million term loan facility scheduled to be
fully repaid on December 31, 2023 for certain lenders in favor of Civeo.

As of September 30, 2021, we had outstanding letters of credit of $0.9 million
under the U.S. facility, zero under the Australian facility and $1.2 million
under the Canadian facility. We also had outstanding bank guarantees of A$0.8
million under the Australian facility.

See Note 9 - 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 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 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 September 30, 2021, thereby increasing the
liquidation preference to $10,723 per share as of September 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 September 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 September 30, 2021,
except for
                                       36
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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.
                                       37

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