As used herein, "Weatherford ," the "Company," "we," "us" and "our," refer toWeatherford International plc , a public limited company organized under the laws ofIreland , and its subsidiaries on a consolidated basis. The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements and Notes thereto included in "Item 1. Financial Statements." Our discussion includes various forward-looking statements about our markets, the demand for our products and services and our future results. These statements are based on certain assumptions we consider reasonable. For information about these assumptions, please review the section entitled "Forward-Looking Statements" and the section entitled "Part II - Other Information - Item 1A. - Risk Factors."
Overview
We conduct operations in approximately 75 countries and have service and sales locations in oil and natural gas producing regions globally. Our operational performance is reviewed on a geographic basis, and we report the Western Hemisphere and Eastern Hemisphere as separate, distinct reporting segments. Our principal business is to provide equipment and services to the oil and natural gas exploration and production industry, both onshore and offshore. Our two product lines are as follows: (1) Completion and Production and (2) Drilling, Evaluation and Intervention. •Completion and Production ("C&P") offers a suite of modern completion products, reservoir stimulation designs, and engineering capabilities that isolate zones and unlock reserves in deepwater, unconventional, and aging reservoirs and production optimization services and a complete production ecosystem, featuring our artificial-lift portfolio, testing and flow-measurement solutions, and optimization software, to boost productivity and profitability. •Drilling, Evaluation and Intervention ("DEI") comprises a suite of services ranging from early well planning to reservoir management. The drilling services offer innovative tools and expert engineering to increase efficiency and maximize reservoir exposure. Evaluation services merge wellsite capabilities including wireline and managed pressure drilling. We also build and rebuild well integrity for the full life cycle of the well. Using conventional to advanced equipment, we offer safe and efficient tubular running services in any environment. Our skilled fishing and re-entry teams execute under any contingency from drilling to abandonment, and our drilling tools provide reliable pressure control even in extreme wellbores.
Financial Results and Overview
Revenues totaled$945 million and$2.7 billion in the third quarter and first nine months of 2021, respectively, an improvement of$138 million , or 17%, and a decline of$163 million , or 6%, compared to the third quarter and first nine months of 2020, respectively. The third quarter of 2021 year-over-year improvement reflects a 28% increase in service revenues driven by higher demand in certain C&P and DEI sub-product lines, primarily inNorth America andSouth America , which spurred the 40% growth in the Western Hemisphere and a 3% increase in the Eastern Hemisphere. Western Hemisphere growth was primarily driven by higher business activity levels for C&P services and products primarily inCanada ,Argentina andthe United States . The 6% revenue decline in the first nine months of 2021 compared to 2020 was primarily due to the lower business activity experienced during the first quarter of 2021 compared to the pre-COVID-19 first quarter of 2020. The pandemic had an immediate negative impact beginning in the second quarter of 2020 in the Western Hemisphere while taking longer to significantly impact the Eastern Hemisphere. Total operating income improved$131 million and$1.5 billion in the third quarter of 2021 and first nine months of 2021 compared to the third quarter and first nine months of 2020, respectively, primarily from the absence of impairment and restructuring charges in 2021. In addition, selling, general and administrative, corporate, and research and development expense declined in the first nine months of 2021, reflecting the benefits of the cost improvement initiatives that were implemented during 2020 and earlier in 2021. Segment operating income was$79 million and$118 million in the third quarter and first nine months of 2021, respectively, an increase of$76 million for both the third quarter and first nine months of 2021, compared to the third quarter 18 --------------------------------------------------------------------------------
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and first nine months of 2020. The third quarter of 2021 year-over-year improvement was driven by the increased activity levels and demand for both C&P and DEI services primarily inNorth America ,South America andMiddle East &North Africa andAsia ("MENA/Asia "). The first nine months of 2021 year-over-year improvement was driven by the increased activity levels and demand for C&P and DEI services primarily in the Western Hemisphere with improvements inNorth and South America .
Impairments and Other Charges (Credits), Net
Please see summary of details at "Note 2 - Impairments and Other Charges (Credits), Net" to our Condensed Consolidated Financial Statements.
Industry Trends
The level of spending in the energy industry is heavily influenced by the current and expected future prices of oil and natural gas, but is also impacted by environmental, social and governance ("ESG") initiatives, ongoing supply chain shortages, and customer capital spending plans. These factors result in an increase or decrease in demand for our products and services. Rig count is an indicator of the level of spending for the exploration and production of oil and natural gas reserves. The following charts set forth certain statistics that reflect historical market conditions. The table below shows the average oil and natural gas prices forWest Texas Intermediate ("WTI"), United Kingdom Brent crude oil andHenry Hub natural gas. Three Months Ended Year Ended 9/30/2021 9/30/2020 12/31/2020 Oil price - WTI (1)$70.62 $40.89 $39.23 Oil price - Brent (1)$73.47 $42.96 $41.76 Natural gas price - Henry Hub (2)$4.36 $2.00 $2.04
(1) Oil price measured in dollars per barrel (2) Natural gas price measured in dollars per million British thermal units (Btu), or MMBtu
The average rig counts based on the weekly Baker Hughes Company rig count information were as follows:
Three Months Ended Nine Months Ended 9/30/2021 9/30/2020 9/30/2021 9/30/2020 North America 647 301 570 566 International 772 731 735 879 Worldwide 1,419 1,032 1,305 1,445 Business Outlook There are indications that the global economic and demand recovery from the COVID-19 pandemic is continuing to build towards pre-pandemic levels as both COVID-19 vaccination rates and global economic activity increase. Oil prices have risen during the year, buoyed by supply policies led by theOrganization of Petroleum Exporting Countries and the expanded alliance ("OPEC+") and other high oil exporting non-OPEC+ nations. Average oil prices for the third quarter of 2021 are approximately 70% higher than the average oil prices for the third quarter of 2020 and natural gas prices have increased 118% over the same period. WTI oil spot prices have recovered to pre-pandemic levels, averaging approximately$71 per barrel during the third quarter of 2021. However, theNorth America and International average rig count continues to be well below pre-pandemic levels. We expect continued improvements in our customer activity levels with the ongoing COVID-19 vaccine rollout globally and multinational economic stimulus actions which are expected to provide a measured pathway to oil and natural gas demand recovery throughout 2021. We believe that industry activity will likely continue to recover and our fourth quarter 2021 consolidated revenues are expected to increase by low -single digits above the third quarter of 2021. 19 --------------------------------------------------------------------------------
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We continue to closely monitor the ongoing global impacts surrounding the COVID-19 pandemic, including operational and manufacturing disruptions, logistical constraints and travel restrictions. The oilfield services industry growth is highly dependent on many external factors, such as the global response to the COVID-19 pandemic, our customers' capital expenditures, ESG driven business changes, world economic and political conditions, the price of oil and natural gas, member-country quota compliance within the OPEC+, weather conditions and other factors.
COVID-19 Pandemic Impacts
We have experienced and expect to continue to experience inflationary pressures when sourcing raw material and services, delays and supply shortages as our supplier base continues to return to work and reopening challenges. Shipping and other logistics activities are experiencing tight availability for carriers, containers and shipping materials, exacerbating the delays and lack of availability of key components. In addition, we continue to experience certain customer restrictions that prevent access to their sites, community measures to contain the spread of the COVID-19 virus, and changes to our policies that have both restricted and changed the way our employees work. We continuously improve crew rotations and management practices to minimize our employees' risk of exposure to the COVID-19 virus while at client facilities. We constantly refine and update our identification and management of COVID-19 cases through the development of updated protocols, advanced testing and response procedures consistent with the latest guidance, from the Centers of Disease Control and Prevention and theWorld Health Organization . Faced with these challenges, we evolved our digital portfolio and enhanced our applications to offer fully integrated digital oilfield solutions. We also increased our offerings of automated well construction and remote monitoring and predictive analytics related to our product offerings.
Opportunities and Challenges
As production decline rates persist and reservoir productivity complexities increase, our customers continue to face challenges in balancing the cost of extraction activities with securing desired rates of production while achieving acceptable rates of return on investment. These challenges increase our customers' requirements for technologies that improve productivity and efficiency and puts pressure on us to deliver our products and services at competitive rates. In addition, as consolidation of the oil and gas services industry continues due to market conditions, there has been an increased demand for companies with specialized products, services and technologies. We believe we are well positioned to satisfy our customers' needs, but the level of improvement in our businesses in the future will depend heavily on pricing, volume of work, our ability to offer solutions to more efficiently extract oil and gas while controlling costs, and our success in penetrating new and existing markets with our newly developed technologies. Over the long-term, we expect the world's demand for energy to continue rising, requiring increased oil field services and more advanced technology from the oilfield service industry. We remain focused on delivering innovative and cost-efficient solutions for customers to assist them in achieving their operational, safety and environmental objectives. Our challenges also include market conditions that could make it more difficult to obtain our targeted cost reduction benefits and to recruit, motivate and retain employees, including key personnel. Increasing investor and government focus on environmental and social governance factors, the cyclicality of the energy industry and the ongoing COVID-19 pandemic may negatively impact demand for our products and services. We are following our long-term strategy aimed at achieving sustainable profitability in our businesses, servicing our customers and creating value for our shareholders. Our long-term success will be determined by our ability to manage effectively the cyclicality of our industry, including potential prolonged industry downturns, our ability to respond to industry demands in periods of over-supply or uncertain oil prices, and ultimately to generate consistent positive cash flow and positive returns on the invested capital. 20 --------------------------------------------------------------------------------
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Results of Operations
The following table sets forth consolidated results of operations and financial information by operating segment and other selected information for the periods indicated. Favorable Three Months Ended (Unfavorable) (Dollars and shares in millions, except per share data) 09/30/21 09/30/20 $ Change % Change Revenues: Western Hemisphere$ 441 $ 316 $ 125 40 % Eastern Hemisphere 504 491 13 3 % Total Revenues 945 807 138 17 % Operating Income (Loss): Western Hemisphere 45 (2) 47 2,350 % Eastern Hemisphere 34 5 29 580 % Total Segment Operating Income 79 3 76 2,533 % Corporate (16) (28) 12 43 % Total Operating Income (Loss) Before Other Operating Expenses 63 (25) 88 352 % Restructuring Charges - (31) 31 100 % Other (Charges) Credits, Net 8 (4) 12 300 % Total Operating Income (Loss) 71 (60) 131 218 % Interest Expense, Net (69) (64) (5) (8) % Loss on Extinguishment of Debt and Bond Redemption Premium (59) - (59) - % Loss on Termination of ABL Credit Agreement - (15) 15 100 % Other Expense, Net (4) (20) 16 80 % Loss Before Income Taxes (61) (159) 98 62 % Income Tax Provision (28) (8) (20) (250) % Net Loss$ (89) $ (167) $ 78 47 % Net Income Attributable to Noncontrolling Interests 6 7 1 14 % Net Loss Attributable to Weatherford$ (95) $ (174) $ 79 45 % Net Loss per Diluted Share$ (1.36) $ (2.48) $ 1.12 45 % Weighted Average Diluted Shares Outstanding 70 70 N/A N/A Depreciation and Amortization$ 112 $ 117 $ 5 4 % 21
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Table of Contents Favorable Nine Months Ended (Unfavorable) (Dollars and shares in millions, except per share data) 9/30/2021 9/30/2020 $ Change % Change Revenues: Western Hemisphere$ 1,256 $ 1,214 $ 42 3 % Eastern Hemisphere 1,424 1,629 (205) (13) % Total Revenues 2,680 2,843 (163) (6) % Operating Income (Loss): Western Hemisphere 97 4 93 2,325 % Eastern Hemisphere 21 38 (17) (45) % Total Segment Operating Income 118 42 76 181 % Corporate (51) (80) 29 36 % Total Operating Income (Loss) Before Other Operating Expenses 67 (38) 105 276 % Goodwill and Long-Lived Asset Impairments - (1,057) 1,057 100 % Restructuring Charges - (114) 114 100 % Other (Charges) Credits, Net 16 (170) 186 109 % Total Operating Income (Loss) 83 (1,379) 1,462 106 % Interest Expense, Net (211) (181) (30) (17) % Loss on Extinguishment of Debt and Bond Redemption Premium (59) - (59) - % Loss on Termination of ABL Credit Agreement - (15) 15 100 % Other Expense, Net (19) (65) 46 71 % Loss Before Income Taxes (206) (1,640) 1,434 87 % Income Tax Provision (66) (64) (2) (3) % Net Loss (272) (1,704) 1,432 84 % Net Income Attributable to Noncontrolling Interests 17 17 - - % Net Loss Attributable to Weatherford$ (289) $ (1,721) $ 1,432 83 % Net Loss per Diluted Share$ (4.13) $ (24.58) $ 20.45 83 % Weighted Average Diluted Shares Outstanding 70 70 N/A N/A Depreciation and Amortization$ 337 $ 387 $ 50 13 % Segment Revenues Western Hemisphere revenues increased$125 million , or 40%, in the third quarter of 2021 and$42 million , or 3%, in the first nine months of 2021 compared to the third quarter and first nine months of 2020. The third quarter of 2021 year-over-year growth in the Western Hemisphere was due to increased demand for service and products across both C&P and DEI inNorth America andSouth America . Western Hemisphere growth was primarily driven by higher business activity levels for C&P services and products primarily inCanada ,Argentina andthe United States . The Western Hemisphere revenue improvement in the first nine months of 2021 compared to 2020 was due to higher business activity levels for C&P services and products. Eastern Hemisphere revenues increased$13 million , or 3%, in the third quarter of 2021 and decreased$205 million , or 13%, in the first nine months of 2021 compared to the third quarter and first nine months of 2020. The third quarter of 2021 year-over-year increase was due to increased demand for the DEI services in MENA/Asia . The nine months of 2021 year-over-year decrease was due to a decline in international activity resulting in lower C&P and DEI service and product sales since the COVID-19 pandemic. 22 --------------------------------------------------------------------------------
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Segment Operating Results
Western Hemisphere segment operating income of$45 million and$97 million in the third quarter and first nine months 2021, respectively, increased$47 million and$93 million , respectively, compared to the third quarter and first nine months of 2020. The third quarter year-over-year improvements were driven by the increased demand for services across both C&P and DEI businesses inNorth and South America , as well as lower operational and employee costs. The nine months year-over-year improvements were driven by the increased demand for C&P services inNorth and South America , as well as lower operational and employee costs. Eastern Hemisphere segment operating income of$34 million and$21 million in the third quarter and first nine months of 2021, respectively, increased$29 million and decreased$17 million , respectively, compared to the third quarter and first nine months of 2020. The third quarter year-over-year improvement was driven by the improved services mix across both the C&P and DEI businesses in MENA/Asia . The year-over-year decline in the nine months was driven by lower activity levels across for C&P and DEI services related to the COVID-19 pandemic, partially offset by lower operational and employee costs.
Interest Expense, Net
Net interest expense was$69 million and$211 million in the third quarter and first nine months of 2021, respectively, and primarily represents interest on our 11.0% Exit Notes due 2024 ("Exit Notes") and our 8.75% Senior Secured Notes due 2024 ("2024 Senior Secured Notes") as well as amortization of debt issuance costs and discounts. Net interest expense was$64 million and$181 million in the third quarter and first nine months of 2020, respectively, and primarily represents interest on our Exit Notes and our 2024 Senior Secured Notes.
Loss on Termination of ABL Credit Agreement
OnDecember 13, 2019 , we entered into a senior secured asset-based lending agreement in an aggregate amount of$450 million (the "ABL Credit Agreement") which was terminated onAugust 28, 2020 . Upon its termination, we recorded$15 million of noncash "Loss on Termination of ABL Credit Agreement" on our Condensed Consolidated Financial Statements related to unamortized deferred debt issuance costs.
Loss on Extinguishment of Debt and Bond Redemption Premium
OnSeptember 30, 2021 , we repaid our 2024 Senior Secured Notes and recognized a$22 million bond redemption premium on the early redemption and a$37 million noncash loss on extinguishment of debt related to unamortized debt issuance costs and discount, which is presented as "Loss on Extinguishment of Debt and Bond Redemption Premium" on the Condensed Consolidated Statements of Operations.
Other Expense, Net
Other expense, net was$4 million and$19 million in the third quarter and first nine months of 2021, respectively, compared to other expense of$20 million and$65 million in the third quarter and first nine months of 2020, respectively. Other expense, net is comprised of letter of credit fees, other financing charges and foreign exchange losses, primarily attributed to currency losses in countries with no or limited markets to hedge. The first nine months year-over-year improvement was primarily due to lower currency volatility in 2021 compared to the significant volatility in the same period in the prior year following the start of the COVID-19 pandemic. In 2020, the balance included$9 million in reorganization expenses. 23 --------------------------------------------------------------------------------
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Income Taxes
In the three and nine months endedSeptember 30, 2021 , we recognized tax expense of$28 million and$66 million , respectively, on a loss before income taxes of$61 million and$206 million , respectively, compared to the three and nine months endedSeptember 30, 2020 where we recognized tax expense of$8 million and$64 million , respectively, on a loss before income taxes of$159 million and$1.6 billion , respectively. Our income tax provisions are primarily driven by income in certain jurisdictions, deemed profit countries and withholding taxes on intercompany and third-party transactions that do not directly correlate to ordinary income or loss and other adjustments. Impairments and other charges recognized do not result in significant tax benefit as a result of our inability to forecast realization of the tax benefit of such losses.
Please see "Note 13 - Income Taxes" to our Condensed Consolidated Financial Statements for additional details.
Restructuring, Facility Consolidation and Severance Charges
Please see "Note 6 - Restructuring, Facility Consolidation and Severance Charges" to our Condensed Consolidated Financial Statements for additional details of our charges by segment.
Liquidity and Capital Resources
AtSeptember 30, 2021 , we had total cash and cash equivalents and restricted cash of$1.45 billion , which increased$161 million compared to the year endedDecember 31, 2020 . Included in total cash and cash equivalents was$155 million and$167 million of restricted cash atSeptember 30, 2021 andDecember 31, 2020 , respectively. Restricted cash is primarily cash collateral for letters of credit not held under the senior secured letter of credit agreement (the "LC Credit Agreement"). The following table summarizes cash flows provided by (used in) each type of activity and a reconciliation of operating cash flow to non-GAAP free cash flow for the nine months endedSeptember 30, 2021 andSeptember 30, 2020 : Nine Months Ended September 30, (Dollars in millions) 2021 2020 Net Cash Provided by Operating Activities $ 234$ 188 Net Cash Used in Investing Activities (2) (65) Net Cash Provided by (Used in) Financing Activities (65) 376
Reconciliation of Operating Cash Flow to Non-GAAP Free Cash Flow: Net Cash Provided by Operating Activities
$ 234$ 188 Capital Expenditures for Property, Plant and Equipment (44) (100) Proceeds from Disposition of Assets 39 13 Non-GAAP Free Cash Flow $ 229$ 101 Operating Activities Cash provided by operating activities was$234 million for the nine months endedSeptember 30, 2021 compared to$188 million for the nine months endedSeptember 30, 2020 . During the nine months endedSeptember 30, 2021 , the primary sources of cash provided by operating activities were driven by higher operating income and lower accounts payable spend partially offset by higher interest payments. During the nine months endedSeptember 30, 2020 , the primary sources of cash provided by operating activities were from collections on our accounts receivable, and lower payments for working capital activities, retention and performance cash bonuses, partially offset by payments for interest.
Investing Activities
Cash used in investing activities was$2 million for the nine months endedSeptember 30, 2021 compared to$65 million for the nine months endedSeptember 30, 2020 . During the nine months endedSeptember 30, 2021 , the primary uses of cash 24 --------------------------------------------------------------------------------
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were capital expenditures of
Financing Activities
Cash used in financing activities was$65 million for the nine months endedSeptember 30, 2021 compared to cash provided by financing activities of$376 million for the nine months endedSeptember 30, 2020 . During the nine months endedSeptember 30, 2021 , the primary uses of cash were repayments of long-term debt of$510 million primarily for the repayment of our 2024 Senior Secured Notes and finance lease obligations, a$22 million bond redemption premium payment for the early redemption of our 2024 Senior Secured Notes, and$20 million primarily for dividends paid to noncontrolling interests. The primary sources of cash were net proceeds of$491 million , net of commitments fees and debt issuance costs, from the issuance of the 2028 Senior Secured Notes. See "Note 7 - Borrowings and Other Obligations" to our Condensed Consolidated Financial Statements for further details on the debt financing. During the nine months endedSeptember 30, 2020 , the primary source of cash were net proceeds of$457 million from the issuance of our 2024 Senior Secured Notes, offset by uses of cash of$81 million for the repayment of short-term debt and other financing activities related to a deferred payment for our 2018 acquisition of our Qatari joint venture and dividends paid to noncontrolling interests. Non-GAAP Free Cash Flow Non-GAAP free cash flow ("free cash flow") represents cash provided by operating activities less capital expenditures for property, plant and equipment plus proceeds from the disposition of assets. It is a non-GAAP financial measure that should be considered in addition to, not as substitute for or superior to, cash provided by operating activities. Management believes that free cash flow is useful to investors and management as an important operating liquidity measure and is an indicator of our ability to generate cash, pay obligations, reinvest in the business and create shareholder value. Cash provided by operating activities was$234 million and$188 million in the nine months endedSeptember 30, 2021 and 2020, respectively. Free cash flow was a positive$229 million and$101 million in the nine months endedSeptember 30, 2021 and 2020, respectively. Sources of Liquidity Our sources of available liquidity include cash generated by our operations, cash and cash equivalent balances, accounts receivable factoring, and dispositions of businesses or capital assets that no longer fit our long-term strategy. We historically have accessed banks for short-term loans and the capital markets for debt and equity offerings. Based upon current and anticipated levels of operations and our recently completed and announced anticipated long-term debt refinancing, we believe we have sufficient cash from operations and cash on hand to fund our expected financial obligations and cash requirements (discussed below) both in the short-term and long-term. LC Credit Agreement Amendment The LC Credit Agreement is a senior secured letter of credit agreement in an aggregate amount of$215 million maturing onMay 29, 2024 , which is used by the Company and certain of its subsidiaries for the issuance of bid and performance letters of credit.
On
•Permit the borrowing of up to an additional$400 million of secured indebtedness under an asset-based lending facility or a revolving credit facility upon compliance with certain conditions; •Removed the minimum secured liquidity requirement; •Increased the minimum aggregate liquidity requirement from$175 million to$300 million ; •Decreased the minimum aggregate book value of certain pledged assets requirement from$1.25 billion to$1 billion ; and •Increased the ability to redeem debt to$500 million subject to a minimum aggregate liquidity of$400 million 25 --------------------------------------------------------------------------------
Table of Contents at the time of redemption. 2028 Senior Secured Notes OnSeptember 30, 2021 , we entered into an indenture and issued the 6.5% Senior Secured Notes in aggregate principal amount of$500 million maturingSeptember 15, 2028 (the "2028 Senior Secured Notes"). Interest accrues at the rate of 6.5% per annum and is payable semiannually onSeptember 15 andMarch 15 of each year, commencing onMarch 15, 2022 . The 2028 Senior Secured Notes are guaranteed by the Company and the same subsidiaries that guaranteed the 2024 Senior Secured Notes. Exit Notes Redemption
On
2030 Senior Notes and Exit Notes Redemption
OnOctober 27, 2021 , we issued$1.6 billion of 8.625% senior notes dueApril 30, 2030 (the "2030 Senior Notes"). The net proceeds and cash on hand were used to redeem$1.6 billion in principal of our Exit Notes at applicable prices, plus accrued and unpaid interest. The 2030 Senior Notes pay interest semi-annually onJune 1 andDecember 1 of each year, beginning onJune 1, 2022 at a rate of 8.625% per year and will mature onApril 30, 2030 . The 2030 Senior Notes are guaranteed by the Company and the same subsidiaries that guaranteed the 2028 Senior Secured Notes. Cash Requirements Our cash requirements will continue to include interest payments on our long-term debt, payments for capital expenditures, repayment on finance leases, payments for short-term working capital needs and costs associated with our revenue and restructuring payments, including severance. During 2020, we accumulated working capital due to the sharp decrease in demand due to the COVID-19 pandemic. In 2021, operating cash flow benefited from the monetization of working capital accumulated in 2020. As business activity rises to pre-COVID-19 pandemic levels we expect that we will utilize cash to invest in capital assets and inventory. Our cash requirements may also include awards under our employee incentive programs and other amounts to settle litigation related matters. As ofSeptember 30, 2021 , we had$2.1 billion in aggregate principal amount maturing onDecember 1, 2024 and$500 million in aggregate principal amount maturing onSeptember 15, 2028 for our Exit Notes and 2028 Senior Secured Notes, respectively. In addition, onOctober 20, 2021 we redeemed$200 million of our Exit Notes and onOctober 27, 2021 , we issued$1.6 billion in aggregate principal amount of the 2030 Senior Notes with an interest rate of 8.625%. We used the net proceeds from the 2030 Senior Notes issuance and cash on hand to redeem$1.6 billion principal amount of our Exit Notes. Please see "Note 7 - Borrowings and Other Obligations" and "Note 14 - Subsequent Events" to our Condensed Consolidated Financial Statements for additional details. Prior to refinancing of our Exit Notes and 2024 Secured Senior Notes we expected to make annual interest payments of approximately$275 million until their maturity. Subsequent to refinancing our Exit Notes and the 2024 Secured Notes, we expect to make annual interest payments of approximately$204 million until their maturity. Our 2021 payments on operating leases are expected to be$91 million and capital spending is expected to be approximately$100 -$110 million . Cash and cash equivalents (including restricted cash of$155 million primarily related to cash collateral on our letters of credit) totaled$1.45 billion atSeptember 30, 2021 and are held by subsidiaries outside ofIreland . AtSeptember 30, 2021 we had approximately$195 million of our cash and cash equivalents that cannot be immediately repatriated from various countries due to country central bank controls or other regulations. Based on the nature of our structure, other than the restrictions noted above, we foresee we will be able to redeploy cash with minimal to no incremental tax.
Customer Receivables
We may experience delayed customer payments and payment defaults due to, among other reasons, a weaker economic environment, reductions in our customers' cash flow from operations, our customers' inability to access credit markets, as well as unsettled political conditions. 26 --------------------------------------------------------------------------------
Table of Contents Accounts Receivable Factoring From time to time, we participate in factoring arrangements to sell accounts receivable to third-party financial institutions or cash proceeds net of discount and hold-back. The programs we factor under are uncommitted and thus we cannot assure they will be available as a source of liquidity. Our factoring transactions in the three and nine months endedSeptember 30, 2021 and 2020 were recognized as sales of accounts receivable, and the proceeds are included as operating cash flows in our Condensed Consolidated Statements of Cash Flows. During the three and nine months endedSeptember 30, 2021 , we received cash proceeds from the sale of accounts receivable of$12 million and$46 million , respectively, compared to$10 million and$30 million in the three and nine months endedSeptember 30, 2020 , respectively.
Ratings Services' Credit Ratings
On
OnOctober 12, 2021 ,Moody's Investor Services ("Moody's") changed its outlook for the Company to stable from negative and assigned a B3 rating to our new 2030 Senior Unsecured Notes. The ratings on our other debt remained unchanged including a Ba3 credit rating on the 2028 Senior Secured Notes and the LC Credit Agreement, B3 on our Exit Notes, and a B2 long-term corporate family rating.
Off Balance Sheet Arrangements
Guarantees
Weatherford International plc , a public limited company organized under the laws ofIreland , and as the ultimate parent of theWeatherford group, guarantees the obligations of its subsidiaries. Please see our discussion on guarantees in "Part II - Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operation" of our Annual Report on Form 10-K for the year endedDecember 31, 2020 ("2020 Annual Report").
Letters of Credit and Surety Bonds
As ofSeptember 30, 2021 , we had$329 million of letters of credit outstanding, consisting of$173 million under the LC Credit Agreement and$156 million under various bi-lateral uncommitted facilities (for which there was$152 million in cash collateral held and recorded in "Restricted Cash" on our Condensed Consolidated Balance Sheets). As ofSeptember 30, 2021 , we had outstanding surety bonds of$287 million , which were primarily inLatin America where we utilize surety bonds as part of our customary business practice. Any of our outstanding letters of credit or surety bonds could be called by the beneficiaries should we breach certain contractual or performance obligations. If the beneficiaries were to call the letters of credit under our LC Credit Agreement or our surety bonds, our available liquidity would be reduced by the amount called. 27 --------------------------------------------------------------------------------
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Forward-Looking Statements
This report contains various statements relating to future financial performance and results, business strategy, plans, goals and objectives, including certain projections, business trends and other statements that are not historical facts. These statements constitute forward-looking statements. These forward-looking statements generally are identified by the words "believe," "project," "expect," "anticipate," "estimate," "intend," "budget," "strategy," "plan," "guidance," "outlook," "may," "should," "could," "will," "would," "will be," "will continue," "will likely result," and similar expressions, although not all forward-looking statements contain these identifying words. Forward-looking statements reflect our beliefs and expectations based on current estimates and projections. While we believe these expectations, and the estimates and projections on which they are based, are reasonable and were made in good faith, these statements are subject to numerous risks and uncertainties. Accordingly, our actual outcomes and results may differ materially from what we have expressed or forecasted in the forward-looking statements. We undertake no obligation to correct, update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except to the extent required under federal securities laws. The following, together with disclosures under "Part II - Other Information - Item 1A. - Risk Factors", sets forth certain risks and uncertainties relating to our forward-looking statements that may cause actual results to be materially different from our present expectations or projections: •risks associated with disease outbreaks and other public health issues, including COVID-19 and COVID-19 variants, their impact on the global economy and the business of our Company, customers, suppliers and other partners, changes in, and the administration of, treaties, laws, and regulations, including in response to such issues and the potential for such issues to exacerbate other risks we face, including those related to the factors listed or referenced below; •further spread and potential for a resurgence of COVID-19 in a given geographic region and related disruptions to our business, customers, suppliers and other partners and additional regulatory measures or voluntary actions that may be put in place to limit the spread of COVID-19, including vaccination requirements and the associated availability of vaccines, restrictions on business operations or social distancing requirements, and the duration and efficacy of such restrictions; •the price and price volatility of, and demand for, oil, natural gas and natural gas liquids; •member-country quota compliance within theOrganization of Petroleum Exporting Countries and the expanded alliance; •our ability to realize expected revenues and profitability levels from current and future contracts; •our ability to generate cash flow from operations to fund our operations; •global political, economic and market conditions, political disturbances, war, terrorist attacks, changes in global trade policies, weak local economic conditions and international currency fluctuations; •increases in the prices and lack of availability of our procured products and services; •our ability to timely collect from customers; •our ability to realize cost savings and business enhancements from our revenue and cost improvement efforts; •our ability to attract, motivate and retain employees, including key personnel; •our ability to access capital markets on terms that are commercially acceptable to the Company, or at all; •our ability to manage our workforce, supply chain and business processes, information technology systems and technological innovation and commercialization, including the impact of our organization restructure, business enhancements, improvement efforts and the cost and support reduction plans; •potential non-cash asset impairment charges for long-lived assets, intangible assets or other assets; •adverse weather conditions in certain regions of our operations; and •failure to ensure on-going compliance with current and future laws and government regulations, including but not limited to environmental, social, governance and tax and accounting laws, rules and regulations as well as stock exchange listing rules. Many of these factors are macro-economic in nature and are, therefore, beyond our control. Should one or more of these risks or uncertainties materialize, affect us in ways or to an extent that we currently do not expect or consider to be significant, or should underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from those described in this quarterly report as anticipated, believed, estimated, expected, intended, planned or projected.
Finally, our future results will depend upon various other risks and
uncertainties, including, but not limited to, those detailed in our other
filings with the
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risks and uncertainties, see our other filings with the
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