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

July 29, 2020 at 04:14 pm 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.
Overview and Macroeconomic Environment
We provide hospitality services to the natural resources industry in Canada,
Australia and the U.S. Demand for our services can be attributed to two phases
of our customers' projects: (1) the development or construction phase; and (2)
the operations or production phase. The majority of the demand for our services
in our Canadian lodges and Australian villages is driven by on-going operations
and maintenance of oil sands and mining facilities. In general, industry
operating and maintenance spending programs are based on the outlook for
commodity prices, economic growth, global commodity supply/demand dynamics and
estimates of resource production. As a result, demand for our hospitality
services is largely sensitive to expected commodity prices, principally related
to crude oil, metallurgical (met) coal, liquefied natural gas (LNG) and iron
ore. Other factors that can affect our business and financial results include
the general global economic environment and regulatory changes in Canada,
Australia, the U.S. and other markets, including governmental measures
introduced to 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 and met coal resources and, to a lesser extent, other hydrocarbon and
mineral resources. Approximately 70% of our revenue is generated by our lodges
and villages. Where traditional accommodations and infrastructure are
insufficient, inaccessible or cost ineffective, our lodge and village facilities
provide comprehensive hospitality services similar to those found in an urban
hotel. We typically contract our facilities to our customers on a fee-per-day
basis that covers lodging and meals and is based on the duration of customer
needs, which can range from several weeks to several years.
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Generally, our core oil sands and Australian mining customers are making
multi-billion dollar investments to develop their prospects, which have
estimated reserve lives ranging from ten years to in excess of 30 years.
Consequently, these investments are dependent on those customers' long-term
views of commodity demand and prices.
The spread of COVID-19 and the response thereto during the first half of 2020
has negatively impacted the global economy. The actions taken to mitigate the
spread of COVID-19 and the risk of infection have altered, and are expected to
continue to alter, governmental and private-sector policies and behaviors in
ways that have had a significant negative effect on oil consumption, such as
government-imposed or voluntary social distancing and quarantining, reduced
travel and remote work policies. Additionally, global oil prices dropped to
historically low levels in March and April 2020 due to severely reduced global
oil demand, high global crude inventory levels, uncertainty around timing and
slope of worldwide economic recovery after COVID-19 related economic shut-downs
and effectiveness of production cuts by major oil producing countries, such as
Saudi Arabia, Russia and the U.S. While in mid-April 2020, OPEC+ (the
combination of historical OPEC members and other significant oil producers, such
as Russia) announced potential production cuts of up to approximately 10 million
barrels per day, these cuts are not expected to be sufficient to avoid a
historic glut in the second and third quarters of 2020. As a result, oil prices
are expected to remain at low levels for the remainder of 2020.
The economic disruption in 2020 caused by the decline in the price of and demand
for oil has impacted the activity in the Canadian oil sands and we have seen a
decrease in occupancy by our oil sands customers. A reduction in the occupancy
at our Canadian oil sands lodges negatively impacted our business in the quarter
ended June 30, 2020 and could continue to negatively impact our business if oil
prices remain at the current lower levels. Due to lower oil prices and the
economic disruption caused by COVID-19, we implemented certain cost containment
initiatives, including salary and total compensation reductions of between 10%
to 20% for the Board, executive leadership team and other senior management,
headcount reduction in North America of approximately 25% in March through June
2020, and cutting expected 2020 capital spending by approximately 25%.
We continue to closely monitor the COVID-19 situation and have taken measures to
help ensure the health and well-being of our employees, guests and contractors,
including screening for individuals that enter our facilities, social distancing
practices, enhanced cleaning and deep sanitization, the suspension of
nonessential employee travel and work-from-home policies, where applicable.
Alberta, Canada. In Canada, Western Canadian Select (WCS) crude is the benchmark
price for our oil sands customers. Pricing for WCS is driven by several factors,
including the underlying price for West Texas Intermediate (WTI) crude, the
availability of transportation infrastructure (consisting of pipelines and crude
by railcar) and recent actions by the Alberta provincial government to limit oil
production from the province. Historically, WCS has traded at a discount to WTI,
creating a "WCS Differential," due to transportation costs and limited capacity
to move Canadian heavy oil production to refineries, primarily along the U.S.
Gulf Coast. The WCS Differential has varied depending on the extent of
transportation capacity availability.
Certain expansionary oil pipeline projects have the potential to both drive
incremental demand for mobile accommodations assets and to improve take-away
capacity for Canadian oil sands producers over the longer term. While these
pipeline projects, including Kinder Morgan's Trans Mountain Pipeline and the
Keystone XL Pipeline (KXL), have recently received incremental regulatory
approvals, it is still not certain if any of the proposed pipeline projects will
ultimately be constructed. These projects have been delayed due to the lack of
agreement between the Canadian federal government, which supports the pipeline
projects, and the British Columbia provincial government. The Canadian federal
government recently acquired Kinder Morgan's Trans Mountain Pipeline, approved
the expansion of the project and is currently working through the construction
timeline. It was recently announced that the Alberta provincial government will
financially support the construction of the KXL pipeline and construction of
this pipeline expansion could begin later in 2020. Additionally, the U.S.
Supreme Court refused to renew a water permit for the KXL pipeline in July 2020.
Construction of the KXL pipeline in the U.S. is currently suspended, which may
delay connection of the pipeline with Canadian oil sands producers.
While WCS prices in the second quarter of 2020 averaged $19.73 per barrel, by
June 30, 2020 the WCS price had increased to $29.14 per barrel. The WCS
Differential decreased from $15.40 per barrel at the end of the first quarter of
2020 to $10.13 per barrel at the end of the second quarter of 2020. As of
July 24, 2020, the WTI price was $41.14 and the WCS price was $31.62, resulting
in a WCS Differential of $9.52.
The depressed price levels of both WTI and WCS are expected to materially impact
exploration, development, maintenance and production spending and activity by
Canadian operators and, therefore, demand for our hospitality services. For
example, on March 23, 2020, the Fort Hills Energy LP project announced a
reduction of activity from two trains to one
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train. Many of the publicly traded oil and gas companies have announced
significant reductions in their spending forecasts for 2020, reductions in the
range of 30-40%. Continued uncertainty, including about the impact of COVID-19,
and commodity price volatility and regulatory complications are expected to
cause our Canadian oil sands and pipeline customers to delay expansionary and
maintenance spending and defer additional investments in their oil sands assets.
Additionally, if oil prices do not improve, the resulting impact could continue
to negatively affect the value of our long-lived assets.
British Columbia, Canada. Our Sitka Lodge supports the British Columbia LNG
market and related pipeline projects. From a macroeconomic standpoint, global
LNG imports continued to significantly increase in 2019, rising by 40 million
tonnes and reinforcing the need for the global LNG industry to expand access to
natural gas. Evolving government energy policies around the world have amplified
support for cleaner energy supply, creating more opportunities for natural gas
and LNG. Accordingly, the current view is additional investment in LNG supply
will be needed to meet the expected long-term LNG demand growth.
While Western Canada does not currently have any operational LNG export
facilities, LNG Canada (LNGC), a joint venture between Shell Canada Energy, an
affiliate of Royal Dutch Shell plc (40 percent), and affiliates of PETRONAS,
through its wholly-owned entity, North Montney LNG Limited Partnership (25
percent), PetroChina (15 percent), Mitsubishi Corporation (15 percent) and Korea
Gas Corporation (5 percent), is currently constructing a liquefaction and export
facility in Kitimat, British Columbia (Kitimat LNG Facility). As a result,
British Columbia LNG activity and related pipeline projects have become a
material driver of activity for our Sitka Lodge, as well as for our mobile fleet
assets, which are contracted to serve several portions of the related pipeline
construction activity. The actual timing of when revenue is realized from the
CGL pipeline and Sitka Lodge contracts could be impacted by any delays in the
construction of the Kitimat LNG Facility or the pipeline, including recent
blockades that aim to delay construction. In late March 2020, LNGC announced
steps being taken to reduce the spread of COVID-19, including reduction of the
workforce at the project site to essential personnel only. This resulted in a
reduction in occupancy at our Sitka Lodge during the second quarter of 2020.
Occupancy at the Sitka Lodge has returned to expected levels during July 2020.
Australia. In Australia, 82% of our rooms are located in the Bowen Basin and
primarily serve met coal mines in that region. Met coal pricing and production
growth in the Bowen Basin region is predominantly influenced by the levels of
global steel production, which decreased by 6% during the first half of 2020
compared to the first half of 2019. As of July 24, 2020, met coal spot prices
were $112 per metric tonne. Long-term demand for steel is expected to be driven
by increased steel consumption per capita in developing economies, such as China
and India, whose current consumption per capita is a fraction of developed
countries. The outlook for steel consumption is currently uncertain from both a
supply and demand perspective with some large iron ore and met coal producing
jurisdictions curtailing or ceasing production during the COVID-19 pandemic,
affecting supply. The impact on the demand for steel with the closure or
curtailment of manufacturing in economies affected by COVID-19, which will only
return to normal levels of consumption once jurisdictions lift quarantine
requirements and manufacturing facilities are reopened, is also uncertain. There
is a high likelihood that many countries will use infrastructure spend as part
of their economic recovery plan, which would have a positive impact on the
demand for met coal and the spot price. To date, we have not seen a decline in
occupancy at our Australian villages resulting from COVID-19.
Activity in Western Australia is driven primarily by iron ore production, which
is a key steel-making ingredient.  As of July 24, 2020, iron ore spot prices
were $106.27 per metric tonne.
On July 1, 2019, we acquired Action Industrial Catering (Action), a provider of
catering and managed services to the mining industry in Western Australia.
Accordingly, we also have contracts in place for customer-owned villages in
Western Australia which service primarily iron ore mines in addition to gold,
lithium and nickel mines. We believe prices are currently at a level that may
contribute to increased activity over the long term if our customers view these
price levels as sustainable.
Met coal and iron ore prices to date have remained at levels that should support
the current levels of occupancy in our Australia villages and the customer
locations that we manage under Action. Accordingly, we plan to continue focusing
on enhancing the quality of our operations, maintaining financial discipline,
proactively managing our business as market conditions continue to evolve and
integrating Action into our business.
U.S. Our U.S. business supports oil shale drilling and completion activity and
is primarily tied to WTI oil prices in the U.S. shale formations in the Permian
Basin, the Mid-Continent, the Bakken and the Rockies. The U.S. oil rig count and
associated completion activity has been negatively impacted in the first half of
2020 due to the global oil price decline discussed above. Currently, only 188
oil rigs were active at the end of the second quarter of 2020. The Permian Basin
remains the most active U.S. unconventional play, representing 70% of the oil
rigs in the U.S. market at the end of the second quarter of 2020. As of July 24,
2020, there were 181 active oil rigs in the U.S. (as measured by
Bakerhughes.com). With the recent reduction in oil prices and resulting
reduction in spending by exploration and production companies, we will be
exiting the
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Bakken and Rockies markets for our mobile well site units. Those assets will
either be sold or transported to our Texas and Oklahoma 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.
Recent Commodity Prices. Recent WTI crude, WCS crude and met coal pricing trends
are as follows:

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

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

Foreign Currency Exchange Rates. Exchange rates between the U.S. dollar and each
of the Canadian dollar and the Australian dollar influence our U.S. dollar
reported financial results. Our business has historically derived the vast
majority of its revenues and operating income in Canada and Australia. These
revenues and profits/losses are translated into U.S. dollars for U.S. GAAP
financial reporting purposes. The following tables summarize the fluctuations in
the exchange rates between the U.S. dollar and each of the Canadian dollar and
the Australian dollar:
Three Months Ended Six Months Ended
June 30, June 30,
2020 2019 Change Percentage 2020 2019 Change Percentage
Average Canadian
dollar to U.S. dollar $0.72 $0.75 (0.03) (3.5)% $0.73 $0.75 ($0.02) (2.2)%
Average Australian
dollar to U.S. dollar $0.66 $0.70 (0.04) (6.1)% $0.66 $0.71 ($0.05) (6.8)%

As of
June 30, 2020 December 31, 2019 Change Percentage
Canadian dollar to U.S. dollar $0.73 $0.77 (0.04) (4.7)%
Australian dollar to U.S. dollar $0.69 $0.70 (0.01) (1.7)%

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 and iron ore and the resultant impact on the capital spending
plans of our customers in order to plan our business activities. In April 2020,
we revised downward our 2020 capital expenditure plans
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and we currently expect that our 2020 capital expenditures, exclusive of any
expansionary spending, which is contingent on obtaining customer contracts, will
total approximately $15 million, compared to 2019 capital expenditures of $29.8
million. We may adjust our capital expenditure plans in the future as we
continue to monitor the impact of COVID-19. See "Liquidity and Capital
Resources" below for further discussion of 2020 capital expenditures.

Results of Operations
Unless otherwise indicated, discussion of results for the three and six months
ended June 30, 2020, is based on a comparison to the corresponding period of
2019.
Results of Operations - Three Months Ended June 30, 2020 Compared to Three
Months Ended June 30, 2019

Three Months Ended
June 30,
2020 2019 Change

($ in thousands)
Revenues
Canada $ 52,986 $ 78,102 $ (25,116)
Australia 57,071 30,996 26,075
U.S. and other 4,645 13,055 (8,410)
Total revenues 114,702 122,153 (7,451)
Costs and expenses
Cost of sales and services
Canada 42,465 59,276 (16,811)
Australia 34,913 16,055 18,858
U.S. and other 5,755 9,909 (4,154)
Total cost of sales and services 83,133 85,240 (2,107)
Selling, general and administrative expenses 11,490 12,530 (1,040)
Depreciation and amortization expense 22,205 30,996 (8,791)
Impairment expense - 5,546 (5,546)
Other operating income (285) (103) (182)
Total costs and expenses 116,543 134,209 (17,666)
Operating loss (1,841) (12,056) 10,215

Interest expense and income, net (3,850) (6,698) 2,848
Other income 12,642 1,055 11,587
Income (loss) before income taxes 6,951 (17,699) 24,650
Income tax (expense) benefit (122) 2,850 (2,972)
Net income (loss) 6,829 (14,849) 21,678
Less: Net income attributable to noncontrolling
interest 222 - 222
Net income (loss) attributable to Civeo Corporation 6,607 (14,849) 21,456
Dividends attributable to preferred shares 471 461 10
Net income (loss) attributable to Civeo common
shareholders $ 6,136 $ (15,310) $ 21,446

We reported net income attributable to Civeo for the quarter ended June 30, 2020
of $6.1 million, or $0.03 per diluted share. As further discussed below, net
income included $4.7 million ($4.7 million after-tax, or $0.03 per diluted
share) of income associated with the settlement of a representations and
warranties claim related to the Noralta acquisition included in Other income.
We reported net loss attributable to Civeo for the quarter ended June 30, 2019
of $15.3 million, or $0.09 per diluted share. As further discussed below, net
loss included a $5.5 million pre-tax loss ($5.5 million after-tax, or $0.03 per
diluted share) resulting from the impairment of fixed assets included in
Impairment expense.
Revenues. Consolidated revenues decreased $7.5 million, or 6%, in the second
quarter of 2020 compared to the second quarter of 2019. This decrease was
primarily due to lower revenue in Canada resulting from lower occupancy at oil
sands lodges and reduced food services activity, both related to the COVID-19
pandemic and lower oil prices. Additionally, lower
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activity levels in certain markets in the U.S. and weaker Canadian and
Australian dollars relative to the U.S. dollar in the second quarter of 2020
compared to the second quarter of 2019 contributed to decreased revenues. These
items were partially offset by higher revenues in Australia due to the Action
acquisition completed on July 1, 2019, increased occupancy at our Bowen Basin
villages and increased mobile camp activity from a pipeline project in Canada.
See the discussion of segment results of operations below for further
information.
Cost of Sales and Services. Our consolidated cost of sales and services
decreased $2.1 million, or 2%, in the second quarter of 2020 compared to the
second quarter of 2019. This decrease was primarily due to lower cost of sales
in Canada resulting from lower occupancy at oil sands lodges and reduced food
services activity, both related to the COVID-19 pandemic and lower oil prices.
Additionally, lower activity levels in certain markets in the U.S. and weaker
Canadian and Australian dollars relative to the U.S. dollar in the second
quarter of 2020 compared to the second quarter of 2019 contributed to decreased
cost of sales and services. This was partially offset by the Action acquisition,
increased occupancy at our Bowen Basin villages in Australia and higher cost of
sales and services due to increased mobile camp activity from a pipeline project
in Canada. See the discussion of segment results of operations below for further
information.
Selling, General and Administrative Expenses. SG&A expense decreased $1.0
million, or 8%, in the second quarter of 2020 compared to the second quarter of
2019. This decrease was primarily due to lower share-based compensation expense,
lower professional fees and lower travel and entertainment expenses, partially
offset by higher incentive compensation costs. The decrease in share-based
compensation was due to a reduction in the amount of restricted share and
performance share awards outstanding and the reduction in our stock price
associated with phantom share awards during the second quarter of 2020 compared
to the second quarter of 2019.
Depreciation and Amortization Expense. Depreciation and amortization expense
decreased $8.8 million, or 28%, in the second quarter of 2020 compared to the
second quarter of 2019. The decrease was primarily due to (1) certain assets and
intangibles becoming fully depreciated during 2019, (2) the extension of the
remaining life of certain long-lived accommodation assets in Canada during the
fourth quarter of 2019, (3) the impairment of certain long-lived assets in
Canada and the U.S. during the first quarter of 2020 and (4) weaker Canadian and
Australian dollars relative to the U.S. dollar in the second quarter of 2020
compared to the second quarter of 2019. These items were partially offset by
additional depreciation and intangible amortization expense related to our
Action acquisition in 2019.
Impairment Expense. We recorded pre-tax impairment expense of $5.5 million in
second quarter of 2019 associated with long-lived assets in our Australian
reporting unit. Please see Note 6 - Impairment Charges to the notes to the
unaudited consolidated financial statements included in Item 1 of this quarterly
report for further discussion.

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

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

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

Income Tax Benefit. Our income tax benefit for the three months ended June 30,
2020 totaled $0.1 million, or 1.8% of pretax loss, compared to a benefit of $2.9
million, or 16.1% of pretax loss, for the three months ended June 30, 2019.
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 Income (Loss). Other comprehensive income increased $28.3
million in the second quarter of 2020 compared to the second quarter of 2019,
primarily as a result of foreign currency translation adjustments due to changes
in the Canadian and Australian dollar exchange rates compared to the U.S.
dollar. The Canadian dollar exchange rate compared to the U.S. dollar decreased
4% in the second quarter of 2020 compared to a 2% increase in the second quarter
of 2019. The
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Australian dollar exchange rate compared to the U.S. dollar decreased 2% in the second quarter of 2020 compared to a 1% decrease in the second quarter of 2019.

Segment Results of Operations - Canadian Segment



                                                          Three Months Ended
                                                               June 30,
                                                 2020           2019           Change
Revenues ($ in thousands)
Accommodation revenue (1)                     $ 40,204       $ 66,183       $ (25,979)
Mobile facility rental revenue (2)               6,072          1,819

4,253

Food service and other services revenue (3) 6,710 9,086


   (2,376)
Manufacturing revenue (4)                            -          1,014          (1,014)
Total revenues                                $ 52,986       $ 78,102       $ (25,116)

Cost of sales and services ($ in thousands)
Accommodation cost                            $ 28,598       $ 45,145       $ (16,547)
Mobile facility rental cost                      5,285          2,027

3,258


Food service and other services cost             6,163          8,466          (2,303)
Manufacturing cost                                 141            668            (527)
Indirect other costs                             2,278          2,970            (692)
Total cost of sales and services              $ 42,465       $ 59,276

$ (16,811)



Gross margin as a % of revenues                   19.9  %        24.1  %

(4.2) %



Average daily rate for lodges (5)             $     96       $     89

$ 7



Total billed rooms for lodges (6)              409,897        739,627

(329,730)

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





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

Our Canadian segment reported revenues in the second quarter of 2020 that were
$25.1 million, or 32%, lower than the second quarter of 2019. The weakening of
the average exchange rates for the Canadian dollar relative to the U.S. dollar
by 4% in the second quarter of 2020 compared to the second quarter of 2019
resulted in a $1.9 million period-over-period decrease in revenues. Excluding
the impact of the weaker Canadian exchange rates, the segment experienced a 30%
decrease in revenues. This decrease was driven by lower occupancy at oil sands
lodges, where billed rooms were down 45% year-over-year, and reduced food
services activity. These decreases were both related to the COVID-19 pandemic
and lower oil prices. Additionally, revenue was negatively impacted by reduced
manufacturing activity as 2019 included two projects that did not recur in 2020.
Partially offsetting these items was increased mobile camp activity from a
pipeline project.

Our Canadian segment cost of sales and services decreased $16.8 million, or 28%,
in the second quarter of 2020 compared to the second quarter of 2019. The
weakening of the average exchange rates for the Canadian dollar relative to the
U.S. dollar by 4% in the second quarter of 2020 compared to the second quarter
of 2019 resulted in a $1.5 million period-over-period decrease in cost of sales
and services. Excluding the impact of the weaker Canadian exchange rates, the
decreased cost of sales and services was driven by lower occupancy at our oil
sands lodges and reduced food services activity. These decreases were both
related to the COVID-19 pandemic and lower oil prices. Additionally, lower costs
resulted from reduced indirect other costs due to a continued focus on cost
containment and operational efficiencies, partially offset by increased costs
related to enhanced measures during the COVID-19 pandemic and increased mobile
camp activity.

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Our Canadian segment gross margin as a percentage of revenues decreased from
24.1% in the second quarter of 2019 to 19.9% in the second quarter of 2020. This
was primarily driven by increased costs related to enhanced measures during the
COVID-19 pandemic, as well as reduced operating efficiencies due to lower
occupancy.

Segment Results of Operations - Australian Segment


                                                         Three Months Ended
                                                              June 30,
                                                 2020           2019          Change
Revenues ($ in thousands)
Accommodation revenue (1)                     $ 34,933       $ 30,996       $  3,937
Food service and other services revenue (2)     22,138       $      -       $ 22,138
Total revenues                                $ 57,071       $ 30,996

$ 26,075



Cost of sales ($ in thousands)
Accommodation cost                            $ 15,269       $ 15,465       $   (196)
Food service and other services cost            18,759              -

18,759


Indirect other cost                                885            590

295


Total cost of sales and services              $ 34,913       $ 16,055

$ 18,858



Gross margin as a % of revenues                   38.8  %        48.2  %

(9.4) %



Average daily rate for villages (3)           $     70       $     74

$ (4)



Total billed rooms for villages (4)            502,392        416,416

85,976



Australian dollar to U.S. dollar              $   0.66       $   0.70

$ (0.04)





(1)Includes revenues related to village rooms and hospitality services for owned
rooms for the periods presented.
(2)Includes revenues related to food services and other services, including
facilities management for the periods presented.
(3)Average daily rate is based on billed rooms and accommodation revenue.
(4)Billed rooms represent total billed days for the periods presented.

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

Our Australian segment cost of sales increased $18.9 million, or 117%, in the
second quarter of 2020 compared to the second quarter of 2019. The increase was
largely driven by the Action acquisition. Increases also related to increased
occupancy at our Bowen Basin villages which were entirely offset by decreased
activity at our Western Australia villages, additional accretion expense in 2019
related to an asset retirement obligation at one of our Australia villages and
the weakening of the Australian dollar.

Our Australian segment gross margin as a percentage of revenues decreased to
38.8% in the second quarter of 2020 from 48.2% in the second quarter of 2019.
This was primarily driven by Action, which has a service-only business model and
therefore results in lower overall gross margins than the accommodation
business, partially offset by improved margins at our Bowen Basin villages as a
result of increased occupancy.

                                       27
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Segment Results of Operations - U.S. Segment


                                             Three Months Ended
                                                  June 30,
                                     2020          2019          Change
Revenues ($ in thousands)         $ 4,645       $ 13,055       $ (8,410)

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

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

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

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

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

28
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Results of Operations - Six Months Ended June 30, 2020 Compared to Six Months
Ended June 30, 2019

Six Months Ended
June 30,
2020 2019 Change

($ in thousands)
Revenues
Canada $ 132,334 $ 144,872 $ (12,538)
Australia 106,184 59,417 46,767
U.S. and other 14,976 26,414 (11,438)
Total revenues 253,494 230,703 22,791
Costs and expenses
Cost of sales and services
Canada 106,737 113,923 (7,186)
Australia 64,466 31,054 33,412
U.S. and other 15,243 19,893 (4,650)
Total cost of sales and services 186,446 164,870 21,576
Selling, general and administrative expenses 25,427 28,626 (3,199)
Depreciation and amortization expense 47,707 61,778 (14,071)
Impairment expense 144,120 5,546 138,574
Other operating expense (income) 704 (168) 872
Total costs and expenses 404,404 260,652 143,752
Operating loss (150,910) (29,949) (120,961)

Interest expense and income, net (9,429) (13,306) 3,877
Other income 12,667 4,033 8,634
Loss before income taxes (147,672) (39,222) (108,450)
Income tax benefit 8,689 7,334 1,355
Net loss (138,983) (31,888) (107,095)
Less: Net income attributable to noncontrolling
interest 480 - 480
Net loss attributable to Civeo Corporation (139,463) (31,888) (107,575)
Dividends attributable to preferred shares 939 920 19
Net loss attributable to Civeo common
shareholders $ (140,402) $ (32,808) $ (107,594)

We reported net loss attributable to Civeo for the six months ended June 30,
2020 of $140.4 million, or $0.83 per diluted share. As further discussed below,
net loss included (i) a $93.6 million pre-tax loss ($93.6 million after-tax, or
$0.55 per diluted share) resulting from the impairment of goodwill in our
Canadian reporting unit included in Impairment expense, (ii) a $38.1 million
pre-tax loss ($38.1 million after-tax, or $0.23 per diluted share) resulting
from the impairment of long-lived assets in our Canadian reporting unit included
in Impairment expense and (iii) a $12.4 million pre-tax loss ($12.4 million
after-tax, or $0.07 per diluted share) resulting from the impairment of
long-lived assets in our U.S. reporting unit included in Impairment expense. Net
loss was partially offset by $4.7 million ($4.7 million after-tax, or $0.03 per
diluted share) of income associated with the settlement of a representations and
warranties claim related to the Noralta acquisition included in Other income.
We reported net loss attributable to Civeo for the six months ended June 30,
2019 of $32.8 million, or $(0.20) per diluted share. As further discussed below,
net loss included a $5.5 million pre-tax loss ($5.5 million after-tax, or $0.03
per diluted share) resulting from the impairment of fixed assets included in
Impairment expense.
Revenues. Consolidated revenues increased $22.8 million, or 10%, in the six
months ended June 30, 2020 compared to the six months ended June 30, 2019. This
increase was primarily due to higher revenues in Australia due to the Action
acquisition completed on July 1, 2019, increased occupancy at our Bowen Basin
villages and at our Sitka Lodge, as well as higher mobile camp revenues in
Canada related to a pipeline project. These items were partially offset by lower
revenue from reduced occupancy at our north oil sands lodges in Canada resulting
from the COVID-19 pandemic and lower oil prices. Additionally, lower activity
levels in certain markets in the U.S. and weaker Canadian and Australian dollars
relative to the U.S. dollar in the six months ended June 30, 2020 compared to
the six months ended June 30, 2019 also offset the increased revenues. See the
discussion of segment results of operations below for further information.
29
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Cost of Sales and Services. Our consolidated cost of sales and services
increased $21.6 million, or 13%, in the six months ended June 30, 2020 compared
to the six months ended June 30, 2019, primarily due to the Action acquisition
and increased occupancy at our Bowen Basin villages in Australia and at our
Sitka Lodge as well as higher cost of sales and services in Canada due to
increased mobile camp activity from a pipeline project. These items were
partially offset by decreased cost of sales and services due to reduced
occupancy at our north oil sands lodges in Canada resulting from the COVID-19
pandemic and lower oil prices. Additionally, lower activity levels in certain
markets in the U.S. and weaker Canadian and Australian dollars relative to the
U.S. dollar in the six months ended June 30, 2020 compared to the six months
ended June 30, 2019 offset the increased cost of sales and services. See the
discussion of segment results of operations below for further information.
Selling, General and Administrative Expenses. SG&A expense decreased $3.2
million, or 11%, in the six months ended June 30, 2020 compared to the six
months ended June 30, 2019. This decrease was primarily due to lower share-based
compensation expense, partially offset by higher incentive compensation costs
and professional fees. The decrease in share-based compensation was due to a
reduction in the amount of phantom share awards outstanding and the reduction in
our stock price during the six months ended June 30, 2020 compared to the six
months ended June 30, 2019.
Depreciation and Amortization Expense. Depreciation and amortization expense
decreased $14.1 million, or 23%, in the six months ended June 30, 2020 compared
to the six months ended June 30, 2019. The decrease was primarily due to (1)
certain assets and intangibles becoming fully depreciated during 2019, (2) the
extension of the remaining life of certain long-lived accommodation assets in
Canada during the fourth quarter of 2019, (3) the impairment of certain
long-lived assets in Canada and the U.S. during the first quarter of 2020 and
(4) weaker Canadian and Australian dollars relative to the U.S. dollar in the
six months ended June 30, 2020 compared to the six months ended June 30, 2019.
These items were partially offset by additional depreciation and intangible
amortization expense related to our acquisition in 2019.
Impairment Expense. Impairment expense of $144.1 million in the six months ended
June 30, 2020 included the following items:

•Pre-tax impairment expense of $93.6 million related to the impairment of
goodwill in our Canadian reporting unit.
•Pre-tax impairment expense of $38.1 million associated with long-lived assets
in our Canadian reporting unit.
•Pre-tax impairment expense of $12.4 million associated with long-lived assets
in our U.S. reporting unit.

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

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



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

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



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

Income Tax Benefit. Our income tax benefit for the six months ended June 30,
2020 totaled $8.7 million, or 5.9% of pretax loss, compared to a benefit of $7.3
million, or 18.7% of pretax loss, for the six months ended June 30, 2019. Our
effective tax rate for the six months ended June 30, 2020 was impacted by a
deferred tax benefit of $9.6 million offset by an increase of $0.7 million in
the valuation allowance in Canada. For the six months ended June 30, 2020,
Canada and the U.S. were considered loss jurisdictions for tax accounting
purposes and were removed from the annual effective tax rate computation
                                       30
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for purposes of computing the interim tax provision. Although Australia is not
considered a loss jurisdiction for the six months ended June 30, 2020, our
effective tax rate is impacted by utilization of deferred tax assets and a
release of the corresponding valuation allowance in Australia, resulting in no
income tax expense for that jurisdiction. For the six months ended June 30,
2019, Australia and the U.S. were considered loss jurisdictions for tax
accounting purposes and were removed from the annual effective tax rate
computation for purposes of computing the interim tax provision.

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

Segment Results of Operations - Canadian Segment



                                                             Six Months Ended
                                                                 June 30,
                                                  2020             2019            Change
Revenues ($ in thousands)
Accommodation revenue (1)                     $  106,270       $  123,835       $ (17,565)
Mobile facility rental revenue (2)                 8,580            2,600

5,980


Food service and other services revenue (3)       17,484           17,423              61
Manufacturing revenue (4)                              -            1,014          (1,014)
Total revenues                                $  132,334       $  144,872       $ (12,538)

Cost of sales and services ($ in thousands)
Accommodation cost                            $   76,653       $   87,763       $ (11,110)
Mobile facility rental cost                        8,542            2,676

5,866


Food service and other services cost              16,178           16,301            (123)
Manufacturing cost                                   297              857            (560)
Indirect other cost                                5,067            6,326          (1,259)
Total cost of sales and services              $  106,737       $  113,923

$ (7,186)



Gross margin as a % of revenues                     19.3  %          21.4

% (2.0) %



Average daily rate for lodges (5)             $       94       $       91

$ 3



Total billed rooms for lodges (6)              1,118,220        1,365,619

(247,399)

Average Canadian dollar to U.S. dollar $ 0.73 $ 0.75

$ (0.02)





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

Our Canadian segment reported revenues in the six months ended June 30, 2020
that were $12.5 million, or 9%, lower than the six months ended June 30, 2019.
The weakening of the average exchange rates for the Canadian dollar relative to
the U.S. dollar by 2% in the six months ended June 30, 2020 compared to the six
months ended June 30, 2019 resulted in a $2.6 million period-over-period
decrease in revenues. Excluding the impact of the weaker Canadian exchange
rates, the segment experienced a 7% decrease in revenues. This decrease was
driven by reduced occupancy at our lodges in the north oil sands region related
to lower oil prices and the COVID-19 pandemic. Additionally, revenue was
negatively impacted by reduced manufacturing revenue as 2019 included two
projects that did not recur in 2020. Partially offsetting these items, revenue
was favorably impacted by higher occupancy at our Sitka Lodge related to an LNG
project and increased mobile camp activity from a pipeline project.
                                       31
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Our Canadian segment cost of sales and services decreased $7.2 million, or 6%,
in the six months ended June 30, 2020 compared to the six months ended June 30,
2019. The weakening of the average exchange rates for the Canadian dollar
relative to the U.S. dollar by 2% in the six months ended June 30, 2020 compared
to the six months ended June 30, 2019 resulted in a $2.2 million
period-over-period decrease in cost of sales and services. Excluding the impact
of the weaker Canadian exchange rates, the decreased cost of sales and services
was driven by reduced occupancy at our lodges in the north oil sands region and
reduced indirect other costs from a continued focus on cost containment and
operational efficiencies. These decreases were partially offset by higher
occupancy at our Sitka Lodge, as well as increased mobile camp activity from a
pipeline project and increased costs related to enhanced measures during the
COVID-19 pandemic.

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

Segment Results of Operations - Australian Segment


                                                           Six Months Ended
                                                               June 30,
                                                  2020           2019          Change
Revenues ($ in thousands)
Accommodation revenue (1)                     $  67,518       $ 59,417       $  8,101
Food service and other services revenue (2)      38,666              -

38,666


Total revenues                                $ 106,184       $ 59,417

$ 46,767



Cost of sales ($ in thousands)
Accommodation cost                            $  30,264       $ 29,862       $    402
Food service and other services cost             32,466              -

32,466


Indirect other cost                               1,736          1,192

544


Total cost of sales and services              $  64,466       $ 31,054

$ 33,412



Gross margin as a % of revenues                    39.3  %        47.7  %

(8.4) %



Average daily rate for villages (3)           $      69       $     74

$ (5)



Total billed rooms for villages (4)             974,232        798,997

175,235



Australian dollar to U.S. dollar              $    0.66       $   0.71

$ (0.05)





(1)Includes revenues related to village rooms and hospitality services for owned
rooms for the periods presented.
(2)Includes revenues related to food services and other services, including
facilities management for the periods presented.
(3)Average daily rate is based on billed rooms and accommodation revenue.
(4)Billed rooms represent total billed days for the periods presented.

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

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

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

Segment Results of Operations - U.S. Segment


                                               Six Months Ended
                                                   June 30,
                                     2020           2019           Change
Revenues ($ in thousands)         $ 14,976       $ 26,414       $ (11,438)

Cost of sales ($ in thousands) $ 15,243 $ 19,893 $ (4,650)

Gross margin as a % of revenues (1.8) % 24.7 % (26.5) %





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

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

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

Liquidity and Capital Resources



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

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


                                                June 30, 2020       December 31, 2019
Lender commitments (1)                         $     263,500       $

263,500


Reductions in availability (2)                             -

(6,591)


Borrowings against revolving credit capacity        (101,998)              (134,117)
Outstanding letters of credit                         (2,623)                (2,031)
Unused availability                                  158,879                120,761
Cash and cash equivalents                              7,311                  3,331
Total available liquidity                      $     166,190       $        124,092



(1)We also have a A$2.0 million bank guarantee facility. We had bank guarantees
of A$0.7 million under this facility outstanding as of both June 30, 2020 and
December 31, 2019, respectively.
(2)As of June 30, 2020, there were no reductions in our availability under the
Credit Agreement. As of December 31, 2019, $6.6 million of our borrowing
capacity under the Credit Agreement could not be utilized in order to maintain
compliance with the maximum leverage ratio financial covenant in the Credit
Agreement.
                                       33
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Cash totaling $45.3 million was provided by operations during the six months
ended June 30, 2020, compared to $10.0 million provided by operations during the
six months ended June 30, 2019. During the six months ended June 30, 2020 and
2019, $2.9 million was provided by working capital and $22.7 million was used in
working capital, respectively. The increase in cash provided by working capital
in 2020 compared to 2019 is largely due to decreased accounts receivable
balances in Canada.

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

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

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. Net cash of $6.1 million was provided by
financing activities during the six months ended June 30, 2019 primarily due to
net borrowings under our revolving credit facilities of $27.8 million, partially
offset by repayments of term loan borrowings of $17.4 million and $4.3 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, 2020 (in thousands):



      Balance at December 31, 2019                                                   $ 359,080
      Borrowings under revolving credit facilities                                     122,320
      Repayments of borrowings under revolving credit facilities                      (147,950)
      Repayments of term loans                                                         (16,551)
      Translation                                                                      (17,369)
      Balance at June 30, 2020                                                       $ 299,530



We believe that cash on hand and cash flow from operations will be sufficient to
meet our anticipated liquidity needs in the coming 12 months. If our plans or
assumptions change, including as a result of the impact of COVID-19 or the
historic decline in the price of and demand for oil, or are inaccurate, or if we
make acquisitions, we may need to raise additional capital. Acquisitions have
been, and our management believes acquisitions will continue to be, an element
of our long-term business strategy. The timing, size or success of any
acquisition effort and the associated potential capital commitments are
unpredictable and uncertain. We may seek to fund all or part of any such efforts
with proceeds from debt and/or equity issuances or may issue equity directly to
the sellers. Our ability to obtain capital for additional projects to implement
our growth strategy over the longer term will depend on our future operating
performance, financial condition and, more broadly, on the availability of
equity and debt financing. Capital availability will be affected by prevailing
conditions in our industry, the global economy, the global financial markets and
other factors, many of which are beyond our control. In addition, any additional
debt service requirements we take on could be based on higher interest rates and
shorter maturities and could impose a significant
                                       34
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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.

Credit Agreement



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

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

We are required to maintain, if a qualified offering of indebtedness with gross
proceeds in excess of $150 million has been consummated, a maximum leverage
ratio of 4.00 to 1.00 and, if such qualified offering has not been consummated,
a maximum leverage ratio not to exceed the ratios set forth in the following
table:
                       Period Ended                 Maximum Leverage Ratio
          June 30, 2020 & September 30, 2020             3.75 : 1.00
          December 31, 2020 & thereafter                 3.50 : 1.00



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

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

Borrowings under the Credit Agreement are secured by a pledge of substantially
all of our assets and the assets of our subsidiaries. The obligations under the
Credit Agreement are guaranteed by our significant subsidiaries. As of June 30,
2020,
                                       35
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we had ten lenders that were parties to the Credit Agreement, with total
commitments (including both revolving commitments and term commitments) ranging
from $24.9 million to $85.4 million. As of June 30, 2020, we had outstanding
letters of credit of $0.3 million under the U.S. facility, $0.5 million under
the Australian facility and $1.8 million under the Canadian facility.

Dividends



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

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

Off-Balance Sheet Arrangements

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

Contractual Obligations



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

Critical Accounting Policies



For a discussion of the critical accounting policies and estimates that we use
in the preparation of our consolidated financial statements, see "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in our
Annual Report on Form 10-K for the year ended December 31, 2019. 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.


                                       36

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Real-time Estimate Cboe BZX Other stock markets 11:07:58 2024-05-14 am EDT			5-day change	1st Jan Change
24.85 ^USD	+0.16%		+0.73%	+8.84%

Apr. 30	Stifel Adjusts Price Target on Civeo to $31 From $30, Maintains Buy Rating	MT
Apr. 26	Tranche Update on Civeo Corporation's Equity Buyback Plan announced on September 5, 2023.	CI

Stifel Adjusts Price Target on Civeo to $31 From $30, Maintains Buy Rating	Apr. 30	MT
Tranche Update on Civeo Corporation's Equity Buyback Plan announced on September 5, 2023.	Apr. 26	CI
Civeo Corporation Reports Earnings Results for the First Quarter Ended March 31, 2024	Apr. 26	CI
Transcript : Civeo Corporation, Q1 2024 Earnings Call, Apr 26, 2024	Apr. 26
Civeo Corporation Reaffirms Revenue Guidance for the Full Year 2024	Apr. 26	CI
Civeo Corporation Reports Impairment Charges for the First Quarter Ended March 31, 2024	Apr. 26	CI
Civeo Corporation Declares Quarterly Cash Dividend, Payable on June 17, 2024	Apr. 26	CI
Earnings Flash (CVEO) CIVEO CORPORATION Reports Q1 Revenue $166.1M	Apr. 26	MT
North American Morning Briefing : Tech Still in -2-	Apr. 26	DJ
Civeo Shares Fall After CFO Departure	Mar. 08	MT
Civeo Corporation Announces CFO Changes	Mar. 07	CI
Civeo Corporation Announces Departure of Carolyn J. Stone, Senior Vice President and Treasurer	Mar. 07	CI
Tranche Update on Civeo Corporation's Equity Buyback Plan announced on September 5, 2023.	Feb. 29	CI
Civeo Corporation Reports Earnings Results for the Full Year Ended December 31, 2023	Feb. 29	CI
Transcript : Civeo Corporation, Q4 2023 Earnings Call, Feb 29, 2024	Feb. 29
Civeo Corporation Provides Revenue Guidance for the Full Year 2024	Feb. 29	CI
Earnings Flash (CVEO) CIVEO CORPORATION Reports Q4 Revenue $170.8M	Feb. 29	MT
Civeo Corporation Reports Earnings Results for the Fourth Quarter Ended December 31, 2023	Feb. 29	CI
North American Morning Briefing : Fed's Preferred -2-	Feb. 29	DJ
Civeo Maintains Quarterly Dividend at $0.25 a Share, Payable March 18 to Shareholders of Record Feb. 26	Feb. 02	MT
Civeo Corporation Declares Quarterly Cash Dividend, Payable on March 18, 2024	Feb. 02	CI
An unknown buyer completed the acquisition of McClelland Lake Lodge assets of Civeo Corporation.	Jan. 30	CI
Civeo Corporation Announces Retirement of Allan D. Schoening as Senior Vice President	Jan. 09	CI
Stifel Trims Price Target on Civeo to $30 From $31, Maintains Buy Rating	23-10-30	MT
Tranche Update on Civeo Corporation's Equity Buyback Plan announced on August 30, 2022.	23-10-27	CI

	1st Jan change	Capi.
CIVEO CORPORATION	+8.84%	363M
VONOVIA SE	-1.93%	24.53B
CHINA VANKE CO., LTD.	-29.06%	11.3B
AKELIUS RESIDENTIAL PROPERTY AB	+7.84%	10.79B
DEUTSCHE WOHNEN SE	-25.31%	7.69B
VINHOMES	-7.18%	6.86B
LEG IMMOBILIEN SE	+2.24%	6.61B
VINGROUP	+0.90%	6.58B
OPEN HOUSE GROUP CO., LTD.	+17.09%	3.71B
IIDA GROUP HOLDINGS CO., LTD.	-2.27%	3.65B

Civeo Corporation

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CA17878Y2078

Real Estate Development & Operations

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