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Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is -0.09pp more bearish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
+0.07pp
Flat
Net-tone change vs last year's 10-K.
MD&A
-0.24pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
adversely+5
discourage+2
limitations+2
decline+2
adverse+1
Positive rising
enabled+2
able+1
attractive+1
successfully+1
efficiencies+1
Risk Factors (Item 1A)
13,016 words
ITEM 1A. Risk Factors
We are subject to various risks and hazards due to the nature of the business activities we conduct. The risks summarized and discussed below, any of which could materially and adversely affect our business, financial condition, cash flows and results of operations and the price of our shares, are not the only risks we face. We may experience additional risks and uncertainties not currently known to us or, as a result of developments occurring in the future, conditions that we currently deem to be immaterial may also materially and adversely affect our business, financial condition, cash flows and results of operations.
Risks in this section are grouped by category. Many risks affect more than one category and the risks are not in order of significance or probability of occurrence because they have been grouped by categories.
Summary of Risk Factors:
Set forth below is a summary of the risks more fully described in this Part I, Item 1A. “Risk Factors” of this Annual Report on Form 10-K. This summary should be read in connection with the Risk Factors more fully described below and should not be relied upon as an exhaustive summary of the material risks facing our business.
• Risks Related to Our Customers
◦ Certain of our customers’ spending may be directly, and our business may be indirectly, affected by (i) or low met coal, oil, iron ore or natural gas prices; (ii) elevated or increasing production costs, including due to tariffs; or (iii) exploration results.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
late+7
weaker+6
loss+3
weakening+2
volatility+2
Positive rising
despite+3
opportunities+2
improvements+1
greater+1
stabilized+1
MD&A (Item 7)
9,307 words
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that are based on management’s current expectations, estimates and projections about our business operations. Read “Cautionary Statement Regarding Forward Looking Statements.” Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of numerous factors, including the known material factors set forth in Item 1A. “Risk Factors” of this annual report. You should read the following discussion and analysis together with our consolidated financial statements and the notes to those statements in Item 8 of this annual report.
This section of this annual report generally discusses key operating and financial data as of and for the years ended 2025 and 2024 and provides year-over-year comparisons for such periods. For a similar discussion and year-over-year comparisons to our 2023 results, refer to "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission on February 27, 2025.
Description of the Business
We provide hospitality services to remote workforces in Australia and Canada, including catering and food service, lodging, housekeeping and maintenance at accommodation facilities that we or our customers own. We also provide services that support the day-to-day operations of these facilities, such as laundry, facility management and maintenance, water and wastewater treatment, power generation, communication systems, security and logistics. We also manage development activities for workforce accommodation facilities, including site selection, permitting, engineering and design and manufacturing and site construction management, along with providing hospitality services once the facility is constructed. We primarily operate in some of the world’s most active metallurgical (met) coal, oil, iron ore and liquefied natural gas (LNG) producing regions, and our customers include mining companies, major and independent oil companies, construction, engineering companies and oilfield and mining service companies. We operate in two principal reportable business segments – Australia and Canada.
◦ Our customers and their operations are exposed to a number of unique operating risks and challenges.
◦ We depend on several significant customers.
◦ Failure to retain our current customers, renew our existing customer contracts and obtain new customer contracts, or the termination of existing contracts, could adversely affect our business.
◦ Adverse events in areas where we operate could negatively impact our business, and our geographic concentration could limit the number of customers seeking our services.
◦ We may be adversely affected if customers reduce their accommodations outsourcing.
• Risks Related to Our Operations
◦ We operate in a highly competitive industry, and if we fail to compete effectively, our business will suffer.
◦ Our operations may suffer due to over-capacity of certain types of accommodations assets in certain regions.
◦ Increased operating costs and limited cost recovery through pricing or contract terms may constrain our ability to make a profit.
◦ Employee and customer labor problems could adversely affect us.
◦ Failure to develop or maintain positive relationships with the Indigenous people in the areas where we operate could adversely affect our business.
◦ Development or required use of permanent infrastructure in the areas where we locate our assets could negatively impact our business.
◦ A failure to maintain food safety or comply with government regulations related to food and beverages or serving alcoholic beverages may subject us to liability.
◦ Changes in U.S. or foreign trade policies, including tariffs and other protectionist trade measures, may adversely impact our future net income, cash flows and financial condition.
◦ The majority of our major Canadian lodges are located on land subject to leases.
◦ We are susceptible to seasonal earnings volatility due to seasonal weather patterns in our regions of operations.
◦ We may be subject to risks associated with the transportation, installation and demobilization of mobile accommodations.
◦ Our business could be negatively impacted by security threats, including cybersecurity threats and other disruptions.
◦ Our business could be disrupted by any failure of our information systems.
◦ Loss of key members of our management could adversely affect our business.
◦ The effects of public health crises, pandemics and epidemics may materially affect how we and our customers are operating our and their businesses.
• Financial/Accounting Risks
◦ Currency exchange rate fluctuations could adversely affect our U.S. dollar reported results of operations and financial position.
◦ Our indebtedness could restrict our strategy and operations and make us more vulnerable to adverse economic conditions.
◦ We may not have adequate insurance for potential liabilities and insurance may not cover certain liabilities.
◦ The cyclical nature of our business and a severeprolongeddownturn has, and could in the future, negatively affect the value of our long-lived assets and our goodwill.
◦ Our inability to control the inherent risks of identifying, acquiring and integrating businesses that we may acquire could adversely affect our operations.
• Legal and Regulatory Risks
◦ We do business in Australia and Canada, whose political and regulatory environments and compliance regimes differ from those in the U.S.
◦ We are subject to extensive and costly environmental laws and regulations.
◦ We may be exposed to certain regulatory and financial risks related to climate change and other environmental, social and governance (ESG) related matters.
• Risks Related to Our Common Shares
◦ The market price and trading volume of our common shares may be volatile.
◦ The repurchases of our common shares or payment of dividends are each within the discretion of our Board of Directors, and there is no guarantee that we will repurchase common shares or pay any dividends in the future or at levels anticipated by our shareholders.
◦ We are governed by the corporate laws in British Columbia, Canada.
◦ Provisions contained in our articles and applicable Canadian and British Columbia laws could discourage a take-over attempt.
◦ The enforcement of civil liabilities against Civeo may be more difficult.
• Risks Related to Our Structure
◦ We are subject to various Australian, Canadian and other taxes.
◦ We remain subject to changes in tax law (in various jurisdictions) and other factors that could impact our effective tax rate.
◦ Future potential changes to U.S. tax laws could result in Civeo being treated as a U.S. corporation for U.S. federal income tax purposes.
Risk Factors:
Risks Related to Our Customers
Certain of our customers’ spending may be directly, and our business may be indirectly, affected by (i) volatile or low met coal, oil, iron ore or natural gas prices; (ii) elevated or increasing production costs, including due to tariffs; or (iii) unsuccessful exploration results.
Demand for our services is sensitive to the level of exploration, development and production activity of, and the corresponding capital spending by, natural resources companies. Our business typically supports customer projects that are capital intensive and require several years to generate first production, with production lasting for decades. The economic analyses conducted by our customers in Australian mining, Canadian oil sands and global LNG investment areas have historically assumed a relatively conservative longer-term price outlook for production from such projects to determine economic viability. The willingness of natural resources companies to explore, develop and produce depends largely upon the availability of attractive resource prospects and the prevailing view of future commodity prices, and expenditures by our natural resources customers generally lag changes in commodity prices by at least three to six months.
Prices for met coal, oil, iron ore, LNG and other natural resources are subject to large fluctuations in response to changes in global supply of and demand for these commodities. Other factors beyond our control that affect commodity prices include:
• worldwide economic activity including growth in and demand for coal, oil and other natural resources, particularly from developing countries, such as China and India;
• the level of activity, spending and natural resource developments in Australia and Canada;
• the level of global oil and gas exploration and production and the impact of government regulation or Organization of the Petroleum Exporting Countries Plus (OPEC+) policies that impact production levels and oil prices;
• the availability of transportation infrastructure and refining capacity for oil, natural gas, LNG and coal;
• global weather conditions, natural disasters and global health concerns;
• tariffs and other international trade policies;
• geopolitical events such as the ongoing Russia/Ukraine and Middle East conflicts;
• the impact on global demand for fossil fuels due to international efforts to address climate change;
• rapid technological change and the timing and extent of energy resource development, including hydraulic fracturing of horizontally drilled wells in shale discoveries and LNG;
• development, commercialization, availability and economics of alternative fuels; and
• government, tax and environmental regulation, including climate change legislation and clean energy policies.
As of February 26, 2026, the West Texas Intermediate (WTI) price was $65.47 and the Western Canadian Select (WCS) price was $51.14, resulting in a discount (WCS Differential) at which WCS trades relative to WTI of $14.33. Should the price of WTI decline or the WCS discount to WTI widen further, our oil sands customers may delay or eliminate additional investments, reduce their spending in the oil sands region or curtail or shut-down existing operations. Further, since February 1, 2025, U.S. Administration has implemented and is in the process of implementing several new tariffs. The implementation, expansion or continuation of tariffs could have an adverse impact on our Australian and Canadian customers' profit margins and capital spending, which may in turn reduce their spending on our accommodations and services.
In early 2026, geopolitical developments in Venezuela including direct U.S. military and strategic actions and efforts by the U.S. to exert control over Venezuelan crude oil production, exports, and sales have created heightened uncertainty in global crude oil markets. These actions have included U.S. seizures of Venezuelan oil tankers and U.S. assertions of influence over Venezuelan energy assets, as part of broader policy efforts to influence global energy supplies and prices. Because Canadian producers export a material portion of crude oil to U.S. markets, where prices are influenced by global supply dynamics and heavy crude availability, any sustained decline in Canadian crude prices relative to global benchmarks, whether due to increased Venezuelan supply, shifts in refinery feedstock preferences, or geopolitical risk premiums could reduce realized pricing for Canadian crude. Such outcome may materially reduce revenues for Canadian producers and affect broader energy sector economic conditions, including demand for services and infrastructure tied to Canadian oil markets.
Our customers and their operations are exposed to a number of unique operating risks and challenges which could also adversely affect us.
We could be materially adversely affected by disruptions to our customers’ operations. The price of and demand for natural resources produced by our customers may impact their desire and/or ability to continue producing existing projects or start new projects. Customers may also experience unexpectedproblems, higher costs or delays in commencing, developing or producing a project. Additionally, the willingness of natural resources companies to explore, develop and produce may be impacted by pressures to limit increases in capital spending generally and on met coal and hydrocarbons in particular, as well as by cost overruns on past and current projects, which could adversely impact demand for our services. Operating risks and challenges our customers face, which may ultimately affect their need for the accommodations and services we provide, include:
• commodity price volatility;
• unforeseen and adverse geological, geotechnical, seismic and mining conditions;
• lack of availability or failure of the required infrastructure, including sourcing sufficient water or power, necessary to maintain or to expand their operations;
• the breakdown or shortage of equipment and labor necessary to maintain their operations;
• capital project cost overruns and cost inflation;
• risks associated with the natural resources industry being subject to laws and regulations, including those governing air and greenhouse gas (GHG) emissions, as well as various regulatory approvals, including a government agency failing to grant an approval or failing to renew an existing approval, or the approval or renewal not being provided by the government agency in a timely manner or the government agency granting or renewing an approval subject to materially onerous conditions;
• risks to land titles, mining titles and use thereof as a result of native title claims;
• claims by persons living in close proximity to mining projects, which may have an impact on the consents granted;
• interruptions to the operations of our customers caused by governmental action, industrial accidents, disputes or public health emergencies; and
• reduce operating costs to increase profitability.
We depend on several significant customers.
We depend on several significant customers, including customers that operate in the natural resources industry. The loss of any one of our largest customers in any of our business segments or a sustained decrease in demand by any of such customers could result in a substantial loss of revenues and could have a material adverse effect on our results of operations. In addition, the concentration of customers in the natural resources industry may impact our overall exposure to credit risk, either positively or negatively, in that customers may be similarly affected by changes in economic and industry conditions. With low and/or volatile oil and gas prices, some of our customers may face liquidity issues, which could impair their ability to pay or otherwise perform on their obligations. Furthermore, some of our customers may be highly leveraged and subject to their own operating and regulatory risks, which increases the risk that they may default on their obligations to us. For a more detailed explanation of our customers, see “Business” in Item 1 of this annual report.
Failure to retain our current customers, renew our existing customer contracts and obtain new customer contracts, or the termination of existing contracts, could adversely affect our business.
Our success depends on our ability to retain our current customers, renew or replace our existing customer contracts and obtain new business. Our ability to do so generally depends on a variety of factors, including overall customer expenditure levels and the quality, price and responsiveness of our services, as well as our ability to market these services effectively and differentiate ourselves from our competitors. We cannot assure that we will be able to obtain new business, renew existing customer contracts at the same or higher levels of pricing, or at all, or that our current customers will not turn to competitors, cease operations, elect to utilize their own, on-site accommodations or terminate contracts with us.
Our business is contract intensive, and we are party to many contracts with customers. Due to the volatile nature of commodity prices, our customers may not renew contracts on terms favorable to us or, in some cases, at all, and we may have difficulty obtaining new business. Several contracts have clauses that allow termination upon the payment of a termination fee. As a result, our customers may choose to terminate their contracts. The likelihood that a customer may seek to terminate a contract is increased during periods of market volatility like those we are currently experiencing. Additionally, our exclusivity contracts do not include minimum room commitments, so we receive payment only if the customer utilizes our services. Finally, while we periodically review our compliance with contract terms and provisions, if customers were to dispute our contract determinations, the resolution of such disputes in a manner adverse to our interests, including customers withholding payments or modification of payment terms, could negatively affect sales and operating results.
Customer contract cancellations, reduced customer utilization, the failure to renew a significant number of our existing contracts or the failure to obtain new business would have a material adverse effect on our business and results of operations.
Due to the significant geographic concentration of our business, adverse events in areas where we operate could negatively impact our business, and our geographic concentration could limit the number of customers seeking our services.
Because of the concentration of our business in three relatively small geographic areas, the coal producing, Bowen Basin region of Queensland and New South Wales, Australia, the oil sands region of Alberta, Canada and the iron ore producing, Pilbara region of Western Australia, we have increased exposure in these areas to political, regulatory, environmental, labor, climate or natural disasters such as forest fires or flooding, events or developments that could disproportionately impact our operations and financial results. For example, in 2011 and 2017, cyclones and flooding threatened our villages in Queensland, Australia. Similarly, in 2011 and 2016, forest fires in northern Alberta impacted areas near our Canadian oil sands lodges. Moreover, global climate change may result in significant natural disasters occurring more frequently or with greater intensity, such as drought, wildfires, storms, sea-level rise, and flooding. Many of the areas in which we operate are very remote with limited local supplies, including availability of water, electricity or natural gas necessary to operate our business, and any significant adverse events such as those discussed above could impact our ability to obtain good or services and personnel.
In addition, a limited number of potential customers operate in the areas in which our business is located, and occupancy at each of our lodges may be constrained by the radius which potential customers are willing to transport their workers. Our geographic concentration could limit the number of customers seeking our services, and as to any single lodge or village, we may have few potential customers. Therefore, we are subject to volatility in occupancy in any location based on the capital spending plans of a limited number of customers, based on their changing decisions as to whether to outsource or use their own company-owned accommodations and whether other potential customers move into that lodge’s radius.
We may be adversely affected if customers reduce their accommodations outsourcing.
Our business and growth strategies depend in large part on customers outsourcing some or all of the services that we provide. Many natural resources companies in our core markets own their own accommodations assets, while others outsource all or part of their accommodations requirements. Customers have largely built their own accommodations in the past but will outsource for additional capacity or if they perceive that outsourcing may provide quality services at a lower overall cost or allow them to accelerate the timing of their projects. We cannot be certain that these customer preferences will continue or that customers that have previously outsourced accommodations will not decide to perform these functions themselves or only outsource accommodations during the development or construction phases of their projects. In addition, labor unions representing customer employees and contractors have, in the past, opposed outsourcing accommodations to the extent that the unions believe that third-party accommodations negatively impact union membership and recruiting. The reversal or reduction in customer outsourcing of accommodations could negatively impact our financial results and growth prospects.
Risks Related to Our Operations
We operate in a highly competitive industry, and if we fail to compete effectively, our business will suffer.
The workforce accommodations and hospitality industry in which we operate is highly competitive. To be successful, we must provide hospitality services that meet the specific needs of our customers at competitive prices. The principal competitive factors in the markets in which we operate are service quality, availability, price, location, technical knowledge and experience and safety performance. We compete with international and regional competitors, several of which are significantly larger than us. These competitors offer similar services in the geographic regions in which we operate. Many natural resources companies in our core markets own their own accommodations assets and outsource their service requirements, while others outsource all or part of their accommodations requirements. As a result of competition, we may be unable to continue to provide our present services, to provide such services at historical operating margins or to acquire additional business opportunities, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. Reduced levels of activity in the workforce accommodation industry can intensify competition and result in lower revenue to us.
Our operations may suffer due to over-capacity of certain types of accommodations assets in certain regions.
The demand for and/or pricing of rooms and accommodation services is subject to the overall availability of rooms in a region. If demand for our assets were to decrease, or to the extent that we and our competitors have capacity in excess of current demand, we may encounter decreased pricing for, or utilization of, our assets and services, which could adversely impact our operations and profits. For example, we experienced a decrease in customer demand in 2020 for accommodations in the Canadian oil sands and our U.S. business as a result of the economic disruption caused by COVID-19, and experienced a corresponding decrease in our occupancy and profitability. Volatility in commodity price levels, any future global health crises, inflationary pressures, actions taken by OPEC+ to adjust production levels, geopolitical events such as the ongoing Russia/Ukraine and Middle East conflicts, and regulatory developments affecting such prices, among other factors, could cause our Australian met coal customers and Canadian oil sands and pipeline customers to reduce production, delay expansionary and maintenance spending and defer additional investments in their oil sands assets, which would cause a decrease in customer demand for our accommodations.
Increased operating costs and limited cost recovery through pricing or contract terms may constrain our ability to make a profit.
Our profitability can be adversely affected to the extent we are faced with cost increases for food, wages and other labor related expenses, insurance, fuel and utilities, especially to the extent we are unable to recover such increased costs through increases in the prices for our services, due to one or more of general economic conditions, competitive conditions or contractual provisions in our customer contracts. For example, substantial increases in the cost of fuel and utilities have historically resulted in cost increases in our lodges and villages.
Over the past few years, we experienced, and may continue to experience, increases in our food costs from time to time due to increasing fuel prices, rising global food demand, other general inflationary pressures and rising supply chain issues affecting supply of goods. In addition, food prices can fluctuate as a result of foreign exchange rates and temporary changes in supply, including as a result of incidences of wildfires or severe weather such as droughts, heavy rains and late freezes, or other climate effects. Climate and natural disaster events, such as forest fires or flooding, have the ability to impact local crop production, limiting supply and therefore having an upward pressure on food prices. For example, large swathes of farmland across the Australian states of New South Wales, Queensland and Victoria in 2022 were inundated with flood waters, damaging wheat and other crops including fruit and vegetables.
A shortage of skilled labor could also result in higher wages due to more expensive temporary hire labor resources that would increase our labor costs, which could negatively affect our profitability. For example, within the past few years we have been impacted by increased staff costs as a result of hospitality labor shortages in Australia due to low levels of immigration into Australia and, specifically, an acute shortage of skilled labor. The reduced levels of immigration and shortage of skilled labor subsequently led to an increased reliance on more expensive temporary labor hire resources and negatively affected our profitability. Additionally, an increased proportion of temporary labor hire resources has the effect of driving up costs due to a lack of efficiency. The nature of temporary labor hire resource positions are short term, with key skills unable to be retained in our lodges and villages due to higher staff turnover.
While our multi-year contracts often provide for annual escalation in our room rates for food, labor and utility inflation, we may be unable to fully recover costs, or the recovery may be delayed, and such increases would negatively impact our profitability on contracts that do not contain such inflation protections.
Further, the U.S. and other countries have imposed and from time to time may impose or expand tariffs that affect the goods or raw materials we or our customers use or the products our customers provide. Any new tariffs impacting us or our customers could result in a cost increase in operating our lodges and villages or impact the demand for the services that we provide.
Employee and customer labor problems could adversely affect us.
Our business is labor intensive requiring a significant number of employees to perform housekeeping, janitorial and food service functions at our locations or locations that we manage. As our operations grow or our occupancy increases, we require additional staff to take care of our guests at a standard we deem appropriate and necessary to operate safely. If we are unable to hire a sufficient labor force, we could be required to increase wages or use temporary labor at a higher cost and reduced efficiency. In recent years, we experienced, and expect to continue to experience, a shortage of labor for certain functions, inflationary pressures on wages, and an increasingly competitive labor market. The extent and duration of the effect of these labor market challenges are subject to numerous factors, including geopolitical events such as the ongoing Russia/Ukraine and Middle East conflicts, availability of qualified persons in the markets where we and our contracted service providers operate, inflation and unemployment levels within these markets and our reputation within the labor market. Inefficient operations or further increased labor costs resulting from these labor market challenges could negatively impact our profitability and could damage our reputation with our customers.
Additionally, as of December 31, 2025, we were party to collective bargaining agreements covering 491 employees in Canada and 1,609 employees in Australia. Efforts have been made from time to time to unionize other portions of our workforce. In addition, our facilities serving oil sands development work in Northern Alberta, Canada and mining operations in Australia house both union and non-union customer employees. We have not experienced strikes, work stoppages or other slowdowns in the past, but we cannot guarantee that we will not experience such events in the future. A prolonged strike, work stoppage or other slowdown by our employees or by the employees of our customers could cause us to experience a disruption of our operations or adversely impact our reputation, which could adversely affect our business and results of operations. Additional unionization efforts and new collective bargaining agreements also could materially increase our costs or limit our flexibility. Collective bargaining agreements in our Canadian operations have individual expiration dates, but in no case extend beyond 2028. Enterprise bargaining agreements in our Australian operations cover certain employees working at our villages in Queensland, New South Wales and Western Australia, as well as certain employees working at our integrated services sites in Western Australia. These agreements either have individual expiration dates or continue until either party seeks to have such agreement cancelled, but in no case extend beyond 2028.
Failure to develop or maintain positive relationships with the Indigenous people in the areas where we operate could adversely affect our business.
A component of our business strategy is based on developing and maintaining positive relationships with the Indigenous people and communities in the areas where we operate. These relationships are important to our operations and our customers who desire to work on traditional Indigenous lands. The inability to develop and maintain relationships and to be in compliance with local requirements could have an adverse effect on our business and results of operations.
Development or required use of permanent infrastructure in the areas where we locate our assets could negatively impact our business.
We specialize in providing hospitality services for workforces in remote areas which often lack the infrastructure typically available in nearby towns and cities. If permanent towns, cities and municipal infrastructure develop, grow or otherwise become available in the regions of Australia where we operate, the oil sands region of northern Alberta, Canada or
the west coast of British Columbia, then demand for our hospitality services could decrease as customer employees move to the region and choose to utilize permanent housing and food service.
The majority of our Canadian business depends on providing accommodations and related services to fly-in/fly-out workers supporting natural resource development projects, including oil sands operations in Alberta, Canada. Certain provincial government officials and policymakers, including representatives of the Government of Alberta, have publicly expressed a preference for increased use of local workforces and for workers to reside in nearby communities, such as Fort McMurray, rather than utilizing fly-in/fly-out employment models supported by temporary workforce accommodations and camps.
Although there is currently no comprehensive legislation prohibiting fly-in/fly-out arrangements, government policies, permitting decisions, infrastructure planning, fiscal incentives, or informal regulatory pressures could increasingly discourage or restrict the use of workforce camps or other temporary accommodations. Such measures could include limitations on approvals for new camps, restrictions on the expansion or renewal of existing facilities, or incentives favoring permanent residential development over temporary accommodations.
If resource operators respond to these policies by reducing or eliminating fly-in/fly-out employment practices, relocating workers to permanent housing in local communities, or delaying or canceling projects that rely on a transient workforce, demand for our accommodations and services could decline. Any such reduction in demand could result in lower occupancy rates, reduced revenues, impairment of long-lived assets, or the loss of existing or prospective customer contracts.
In addition, changes in workforce policies may occur with limited advance notice and could vary by jurisdiction or project, making it difficult for us to anticipate, plan for, or mitigate their impact. We may not be able to offset adverse effects through diversification, price adjustments, or alternative uses of our assets, particularly where our facilities are located in remote or single-industry regions. As a result, changes in government policy or regulatory attitudes toward fly-in/fly-out workforces could materially and adversely affect our business.
A failure to maintain food safety or comply with government regulations related to food and beverages or serving alcoholic beverages may subject us to liability.
Claims of illness or injury relating to food quality or food handling are common in the food service industry, and a number of these claims may exist at any given time. Because food safety issues could be experienced at the source or by food suppliers or distributors, food safety could, in part, be out of our control. Regardless of the source or cause, any report of food-borne illness or other food safety issues such as food tampering or contamination at one of our locations could adversely impact our reputation, hindering our ability to renew contracts on favorable terms or to obtain new business, and have a negative impact on our revenue. Future food product recalls and health concerns associated with food contamination may also increase our raw materials costs and, from time to time, disrupt our business.
A variety of regulations at various governmental levels relating to the handling, preparation and serving of food (including, in some cases, requirements relating to the temperature of food), cleanliness of food production facilities and hygiene of food-handling personnel are enforced primarily at the local public health department level. We can give no assurances that we are in full compliance with all applicable laws and regulations at all times or that we will be able to comply with any future laws and regulations. Furthermore, legislation and regulatory attention to food safety is very high. Additional or amended regulations in this area may significantly increase the cost of compliance or expose us to liabilities.
We serve alcoholic beverages at some of our facilities and must comply with applicable licensing laws, as well as local service laws. These laws generally prohibit serving alcoholic beverages to certain persons such as a patron who is intoxicated or a minor. If we violate these laws, we may be liable to the patron and/or to third parties for the acts of the patron. We cannot guarantee that certain patrons will not be served or that liability for their acts will not be imposed on us. There can be no assurance that additional regulation in this area would not limit our activities in the future or significantly increase the cost of regulatory compliance. We must also obtain and comply with the terms of licenses in order to sell alcoholic beverages in the jurisdictions in which we serve alcoholic beverages. If we are unable to maintain food safety or comply with government regulations related to food, beverages or alcoholic beverages, the effect could be materially adverse to our business and results of operations.
Changes in U.S. or foreign trade policies, including tariffs and other protectionist trade measures, may adversely impact our future net income, cash flows and financial condition.
The U.S. administration has taken executive action and proposed additional measures intended to alter the U.S. approach to international trade policy, the terms of certain existing bilateral or multi‐lateral trade agreements and trading arrangements
with foreign countries. Such changes to U.S. international trade policy, and retaliatory trade measures that foreign governments take in response, including the imposition of tariffs, sanctions, export or import controls, and other measures that restrict international trade, or the threat of such actions, could result in additional increases in the global cost of certain goods, services and cost of capital. In addition, related geopolitical and domestic political developments, such as existing and potential trade wars and uncertainty regarding changes in trade policy, have increased and may continue to increase levels of political and economic unpredictability globally and the volatility of global financial markets. As a result, prevailing macroeconomic conditions may adversely impact our future net income, cash flows and financial condition.
The majority of our major Canadian lodges are located on land subject to leases. If we are unable to renew a lease or obtain permits necessary to operate on such leased land, we could be materially and adversely affected.
The majority of our major Canadian lodges are located on land subject to provincial leases. Accordingly, while we own the accommodations assets, we only own a leasehold in those properties. If we are found to be in breach of a lease, we could lose the right to use the property. In addition, our leases generally have an initial term of ten years and unless extended will expire between 2027 and 2035 with the exception of one lease that expires in 2049. Unless we can extend the terms of these leases before their expiration, as to which no assurance can be given, we will lose our right to operate our facilities located on these properties upon expiration of the leases. In that event, we would be required to remove our accommodations assets and remediate the site at our own cost, which could be material. For example, we did not renew a land lease associated with our McClelland Lake Lodge in Alberta, Canada, that expired in June 2023 and sold the related assets in January 2024 in order to support our customer’s intent to mine the land where the lodge was located. Our assets associated with our McClelland Lake Lodge were demobilized, for which we recognized $15.4 million in demobilization costs, and completely removed from the then existing site in the first quarter of 2024.
As of December 31, 2025, we had asset retirement obligation liabilities on our balance sheet of $16.9 million. Consistent with U.S. generally accepted accounting principles, these liabilities are the estimated present value of the amount of required asset removal and site remediation costs related to the retirement of assets. Should the remediation requirement be accelerated, our near term cash obligation could be significantly larger than the liability currently on our balance sheet and could negatively impact our cash flows and liquidity.
Lease renewals and extensions are subject to government discretion and may be influenced by evolving policy priorities, permitting practices, infrastructure planning, or regulatory or political considerations. Changes in government policy could increasingly discourage or restrict the continued use, expansion, or renewal of leased land for temporary accommodations, or could result in lease renewals being offered only on terms that are economically less attractive to us. Also, in certain areas in which we operate, we are required to seek permits from local government agencies in order to build a new lodge or operate an existing lodge on leased land. We can provide no assurances that we will be able to renew our leases or permits upon expiration on similar terms, or at all. If we are unable to renew our leases or permits on similar terms, it may have an adverse effect on our business and results of operations.
We are susceptible to seasonal earnings volatility due to seasonal weather patterns in our regions of operations.
Our operations are directly affected by seasonal differences in weather in the areas in which we operate. During the Australian rainy season, generally between the months of November and April, our operations in Queensland and the northern parts of Western Australia can be affected by cyclones, monsoons and flooding. A portion of our Canadian operations is conducted during the winter months when the winter freeze in remote regions is required for exploration and production activity to occur. The spring thaw in these frontier regions restricts operations in the spring months and, as a result, adversely affects our operations and our ability to provide services in the second quarter. Additionally, the areas in which we operate are susceptible to wildfires. Finally, global climate change may result in certain of these adverse weather conditions occurring more frequently or with greater intensity. If any of these conditions occur, our operations could be interrupted and our earnings may be adversely impacted.
We may be subject to risks associated with the transportation, installation and demobilization of mobile accommodations.
We currently have several contracts to transport and install modular, skid-mounted accommodations and central facilities that can be quickly configured to serve a multitude of short- to medium-term accommodation needs. In connection with the transportation and installation of these facilities, we may be exposed to various risks, including:
• delays in necessary approvals to install the facilities or objections to our activities or those of our customers aired by aboriginal or community interests, environmental and/or neighborhood groups which may cause delays in the granting of such approvals and/or the overall progress of a project;
• challenges during installation, including problems, defects, inclement weather conditions, land contamination, cultural heritage claims, difficult site access or industrial relations issues; and
• risks related to the quality of our materials and workmanship, including warranties and defect liability obligations.
Our business could be negatively impacted by security threats, including cybersecurity threats and other disruptions.
We face various security threats, including cybersecurity threats to our data and systems and those of third-party service providers, threats to the safety of our employees, threats to the security of our facilities and infrastructure or third-party facilities and infrastructure and threats from terrorist acts. Although we utilize various procedures and controls to monitor these threats and mitigate our exposure to such threats, including cybersecurity insurance, there can be no assurance that these procedures and controls will be sufficient in preventing security threats from materializing, including attempts to gainunauthorized access to sensitive information or to render data or systems unusable or hold them for ransom. If any of these events were to materialize, they could lead to losses of sensitive information, critical infrastructure, personnel or capabilities essential to our operations and could have a material adverse effect on our reputation, competitive position, financial position, results of operations or cash flows.
Cybersecurity threats in particular develop and evolve rapidly, including from emerging technologies, such as advanced forms of artificial intelligence (AI). Due to evolving cybersecurity threats, it has and will continue to be difficult to prevent, detect, mitigate, and remediate cybersecurity incidents. Such threats include, but are not limited to, malicious software, attempts to gainunauthorized access to data, ransomware attacks and other electronic security breaches that could lead to disruptions in critical systems, unauthorized release of or denial of access to confidential or otherwise protected information and corruption of data. We have experienced, and expect to continue to confront, efforts by hackers and other third parties to gainunauthorized access or deny access to, or otherwise disrupt, our information systems and networks. While we have not experienced a material cybersecurity incident in the last three years, a material cybersecurity incident could result in increased costs to prevent, respond to or mitigate cybersecurity incidents, damage to our brand or reputation, or otherwise result in a material adverse effect on our business, financial condition, results of operations or liquidity. Moreover, a delay in or failure to detect a cybersecurity incident, or the full extent of an incident, could exacerbate the effects of the incident.
In addition, we are subject to evolving laws and regulations governing data protection and the unauthorized disclosure of confidential information, which are evolving and can vary significantly by jurisdiction. Such laws and regulations may pose increasingly complex compliance challenges and elevate our compliance costs. Any failure by us to comply with these laws and regulations, including as a result of a cybersecurity or data protection incident, could result in a loss of sensitive information, litigation, regulatory action and potential liability. Further, we may incur additional costs or operational impacts related to the prevention, response or remediation of a cybersecurity or data protection incident, and such costs may not fully be covered by insurance coverage or indemnified by other means.
Our business could be disrupted by any failure of our information systems.
We depend on our information systems to actively manage our accommodation services, including with respect to administrative functions, financial and operational data, ordering and point of sale processing, to enhance our ability to optimize facility utilization, occupancy, costs of goods sold and average daily rate. The failure of our information systems to perform as anticipated could damage our reputation with our customers, disrupt our business or result in, among other things, decreased revenue and increased costs. Any such failure could harm our business, results of operations and financial condition. In addition, the delay or failure to implement information system upgrades and new systems effectively could disrupt our business, distract management’s focus and attention from business operations and growth initiatives, and increase our implementation and operating costs, any of which could materially adversely affect our operations and operating results. Furthermore, these technologies may require refinements and upgrades, which may require significant investment by us. As various systems and technologies become outdated or new technology is required, we may not be able to replace or introduce them as quickly as needed or in a cost- effective and timely manner. As a result, we may not achieve the benefits we may have been anticipating from any new technology or system .
We occasionally rely on commercially available software products to support and operate key business functions. For many of these, third‑party vendors have incorporated, or are in the process of incorporating, AI capabilities into their products. The integration of AI features by our suppliers introduces additional risks, including potential vulnerabilities arising from opaque or proprietary model architectures, limitations on our ability to independently audit or validate these AI‑enabled functions, and increased dependence on vendor‑driven updates or controls. Although we have adopted risk‑mitigation principles and practices aligned with the National Institute of Standards and Technology Artificial Intelligence Risk Management
Framework (AI RMF), including processes designed to assess, monitor, and govern the behavior, security, and reliability of AI‑enabled systems, these measures are new and may not be sufficient to eliminate all risks associated with the use of AI technologies. As a result, we may be exposed to operational, compliance, cybersecurity, and data integrity risks associated with the performance or behavior of embedded AI systems. If these AI features do not function as intended, are improperly trained, or generate inaccurate, biased, or misleading outputs, we could experience system implementation failures, operational disruptions, or decision‑making based on erroneous information. Such outcomes could adversely affect business performance, impair customer or stakeholder trust, or harm our reputation.
Loss of key members of our management could adversely affect our business.
We depend on the continued employment and performance of key members of our management. If any of our key managers resign or become unable to continue in their present roles and are not adequately replaced, our business operations could be materially adversely affected. We do not maintain “key man” life insurance for any of our officers.
The effects of public health crises, pandemics and epidemics may materially affect how we and our customers are operating our and their businesses.
Public health crises, pandemics and epidemics, such as the COVID-19 pandemic, have adversely impacted, and may in the future adversely impact, worldwide economic activity, including the operations of natural resources companies in Australia, Canada and the U.S. and the worldwide demand for natural resources. Other effects of such public health crises, pandemics and epidemics include significant volatility and disruption of the global financial markets; volatility of commodity prices and related uncertainties around OPEC+ production; disruption of operations resulting from decreased customer demand and labor shortages; supply chain disruptions or equipment shortages; reduced capital spending by oil and gas companies; and employee impacts and labor shortages from illness, travel restrictions, including border closures, and other community response measures.
The extent to which our business operations and financial results may be affected by such public health crises, pandemics and epidemics depends on various factors beyond our control, such as the duration, severity and sustained geographic impact of the outbreak; the impact and effectiveness of governmental actions to contain and treat such outbreaks, including government policies and restrictions; the availability of effective vaccines and other treatments; vaccine hesitancy, vaccine mandates, and voluntary or mandatory quarantines; and the global response surrounding such uncertainties.
Financial/Accounting Risks
Currency exchange rate fluctuations could adversely affect our U.S. dollar reported results of operations and financial position.
Our reporting currency is the U.S. dollar, and we are exposed to currency exchange risk primarily between the U.S. dollar and the Australian and Canadian dollars. For the year ended December 31, 2025, 100% of our revenues originated from subsidiaries outside of the U.S. and were denominated in either the Australian dollar or the Canadian dollar. As a result, a material decrease in the value of these currencies relative to the U.S. dollar has had, and may have in the future, a negative impact on our reported revenues, net income, financial condition and cash flows. Any currency controls implemented by local monetary authorities in countries where we currently operate could also adversely affect our business, financial condition and results of operations. We may attempt to limit the risks of currency fluctuation where possible by entering into financial instruments to protect against foreign currency exposure, but, to date, we have not entered into any foreign currency financial instruments. Our efforts to limit exchange risks may be unsuccessful, thereby exposing us to foreign currency fluctuations that could cause our results of operations, financial condition and cash flows to deteriorate.
Our indebtedness could restrict our strategy and operations and make us more vulnerable to adverse economic conditions.
As of December 31, 2025, we had approximately $182.8 million outstanding under the revolving portion of our Syndicated Facility Agreement (as amended to date, the Credit Agreement), $0.9 million of outstanding letters of credit and an additional $75.9 million in remaining capacity to borrow under the revolving portion of the Credit Agreement. If market or other economic conditions remain depressed or further deteriorate, our borrowing capacity may be reduced.
Our Credit Agreement contains, and any future indebtedness we incur may contain, a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to, among other things, borrow funds, dispose of assets, pay dividends and make certain investments. In addition, these covenants also may limit our ability to obtain future financings, make needed capital expenditures, withstand a continued downturn in our business or a downturn in the economy in general or otherwise conduct necessary corporate activities. Our ability to comply with these covenants may be affected by events beyond our control. Declines in commodity prices, or a prolonged period of commodity prices at depressed levels, could eventually result in our failing to meet one or more of the financial covenants under the Credit Agreement, which could require us to refinance or amend such obligations resulting in the payment of consent fees or higher interest rates, or require us to raise additional capital at an inopportune time or on terms not favorable to us.
A failure to comply with these covenants, ratios or tests could also result in an event of default. A default under the Credit Agreement, if not cured or waived, could result in acceleration of all indebtedness outstanding thereunder. The accelerated debt would become immediately due and payable. If that should occur, we may be unable to pay all such debt or to borrow sufficient funds to refinance it. Even if new financing were then available, it may not be on terms that are acceptable to us. In addition, in the event of an event of default under the Credit Agreement, the lenders could foreclose on the collateral securing the credit facility and require repayment of all borrowings outstanding. If the amounts outstanding under the credit facility or any of our other indebtedness were to be accelerated, our assets may not be sufficient to repay in full the money owed to the lenders or to our other debt holders. Moreover, any new indebtedness we incur may impose financial restrictions and other covenants on us that may be more restrictive than our existing debt agreements.
Our ability to service our debt, including repaying outstanding borrowings under our Credit Agreement at maturity, will depend upon, among other things, our future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors, some of which are beyond our control. If our business does not generate sufficient cash flows from operations to enable us to meet our obligations under our indebtedness, we will be forced to take actions such as reducing or delaying business activities, including dividend payments and share repurchases, acquisitions, investments and/or capital expenditures, selling assets, restructuring or refinancing our indebtedness or seeking additional equity capital. We may not be able to effect any of these remedies on satisfactory terms or at all, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
We may not have adequate insurance for potential liabilities and insurance may not cover certain liabilities.
Our operations are subject to many hazards. In the ordinary course of business, we become the subject of various claims, lawsuits and administrative proceedings seeking damages or other remedies concerning our commercial operations, products, employees and other matters, including occasional claims by individuals alleging exposure to hazardous materials as a result of our products or operations. Some of these claims relate to the activities of businesses that we have acquired, even though these activities may have occurred prior to our acquisition of such businesses. We maintain insurance to cover many of our potential losses, including cyber risk insurance, and we are subject to various self-retentions and deductibles under our insurance policies. It is possible, however, that a judgment could be rendered against us in cases in which we could be uninsured and beyond the amounts that we currently have reserved or anticipate incurring for such matters. Even a partially uninsured or underinsured claim, if successful and of significant size, could have a material adverse effect on our results of operations or consolidated financial position. In addition, we are insured under certain insurance policies of Oil States International, Inc. (Oil States) for occurrences prior to the completion of our spin-off from Oil States in May 2014 (the Spin-Off). The specifications and insured limits under those policies, however, may be insufficient for such claims. We also face other risks related to our insurance coverage, including (i) we may not be able to continue to obtain insurance on commercially reasonable terms; (ii) the counterparties to our insurance contracts may pose credit risks; (iii) we may incur losses from interruption of our business that exceed our insurance coverage; and (iv) we may not be able to procure insurance for certain risks due to various factors including insurance market constraints.
The cyclical nature of our business and a severeprolongeddownturn has, and could in the future, negatively affect the value of our long-lived assets and our goodwill.
We recorded impairments of our long-lived assets of zero, $11.6 million and $1.4 million in 2025, 2024 and 2023, respectively. As of December 31, 2025, goodwill of $7.5 million at our Australian reporting unit represented 2% of total assets.
Factors that may cause us to recognize further impairmentlosses on our long-lived assets or on the goodwill at our Australian reporting unit include, among other things, extended periods of limited or no activity by our customers at our lodges or villages, increased or unanticipated competition, and downward forecast revisions or restructuring plans or if certain of our customers do not reach positive final investment decisions on projects with respect to which we have been awarded contracts to provide related accommodation, which may cause those customers to terminate the contracts.
Our inability to control the inherent risks of identifying, acquiring and integrating businesses that we may acquire, including any related increases in debt or issuances of equity securities, could adversely affect our operations.
Acquisitions have been, and our management believes acquisitions will continue to be, a key element of our growth strategy. We may not be able to identify and acquire acceptable acquisition candidates on favorable terms in the future. We may be required to incur substantial indebtedness to finance future acquisitions and also may issue equity securities in connection with such acquisitions. Such additional debt service requirements could impose a significant burden on our results of operations and financial condition. The issuance of additional equity securities could result in significant dilution to shareholders. In addition, overpayment of an acquisition could cause potential impairments which could affect our results of operations.
We expect to gain certain business, financial and strategic advantages as a result of business combinations or asset acquisitions we undertake, including synergies and operating efficiencies. Our forward-looking statements assume that we will successfully integrate our acquisitions and realize these intended benefits. For example, on May 6, 2025, we acquired the assets of Qantac Pty Ltd (Qantac), located in Queensland, Australia (the Qantac Acquisition) for total consideration of A$105 million (or approximately US$68 million) in cash. The Qantac Acquisition included four villages, with 1,368 rooms in Australia’s Bowen Basin and the associated accommodation assets, land and customer contracts. There can be no assurance that we will successfully integrate the assets from the Qantac Acquisition into our existing operations in the Bowen Basin or realize the anticipated synergies, operating efficiencies or financial benefits within the expected timeframe, or at all. Additionally, the success of any other acquisitions we make depends, in large part, (i) on the risk that any such acquisition may not be completed in a timely manner or at all, which may adversely affect our business and the price of our common shares, and (ii) our ability to realize the anticipated benefits, including operating synergies from integrating such assets and retaining key employees, vendors and customers associated with such acquired assets. An inability to successfully integrate acquired assets or businesses and to realize expected strategic advantages as a result of any acquisition would negatively affect the anticipated benefits of any such acquisition.
Additionally, an acquisition may bring us into businesses we have not previously conducted or geographies in which we have not previously operated and expose us to additional business risks that are different from those we have previously experienced. Our future success depends, in part, upon our ability to manage this expanded business, which will pose substantial challenges for our management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity. If we fail to manage any of these risks successfully, our business could be harmed. Our capitalization and results of operations may change significantly following an acquisition, and our shareholders may not have the opportunity to evaluate the economic, financial and other relevant information that we will consider in evaluating future acquisitions.
Legal and Regulatory Risks
We do business in Australia and Canada, whose political and regulatory environments and compliance regimes differ from those in the U.S.
All our consolidated revenue is attributable to operations in Australia and Canada in the year ended December 31, 2025. Risks associated with our operations in Australia and Canada include, but are not limited to, (i) different taxing regimes; (ii) changing political conditions at the federal, provincial or state level; (iii) changing international and U.S. monetary policies; and (iv) regional economic downturns.
The regulatory regimes in these countries are substantially different than those in the U.S. and may be unfamiliar to U.S. investors. Violations of non-U.S. laws could result in monetary and criminalpenaltiesagainst us or our subsidiaries and could damage our reputation and, therefore, our ability to do business.
We are subject to extensive and costly environmental laws and regulations that may require us to take actions that will adversely affect our results of operations.
All of our operations are significantly affected by stringent and complex foreign, federal, provincial, state and local laws and regulations governing the discharge of substances into the environment or otherwise relating to environmental protection. We could be exposed to liabilities for cleanup costs, natural resource damages and other damages as a result of our conduct that was lawful at the time it occurred or the conduct of, or conditions caused by, prior operators or other third-parties. There is inherent risk of environmental costs and liabilities in our business as a result of historical industry operations and waste disposal practices, which include air emissions and waste water discharges as well as our handling of petroleum hydrocarbons related to our operations. Certain environmental statutes impose joint and several strict liability for these costs. For example, an accidental
release by us in the performance of services at one of our or our customers’ sites could subject us to substantial liabilities arising from environmental cleanup, restoration costs and natural resource damages, claims made by neighboring landowners and other third parties for personal injury and property damage and fines or penalties for related violations of environmental laws or regulations. We may not be able to recover some or any of these costs from insurance.
Environmental laws and regulations are subject to change in the future, possibly resulting in more stringent requirements. The implementation of new laws and regulations could result in materially increased costs, stricter standards and enforcement, increased reporting obligations, larger fines and liability and increased capital expenditures and operating costs, particularly for our customers, and could have an adverse effect on our business or demand for our services. See Item 1. “Business - Government Regulation” of this annual report for a more detailed description of our risks associated with environmental laws and regulations. It should also be noted that scientists have concluded that increasing concentrations of GHG in the earth’s atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts, and floods and other climatic events.
Any failure by us to comply with applicable environmental laws and regulations may result in governmental authorities taking actions against our business that could adversely impact our business and results of operations, including the issuance of administrative, civil and criminalpenalties; denial or revocation of permits or other authorizations; reduction or cessation of operations; and performance of site investigatory, remedial or other corrective actions.
We may be exposed to certain regulatory and financial risks related to climate change and other ESG-related matters.
Climate change and other ESG-related matters are receiving increasing attention from the media, scientists and legislators alike, which has resulted in legislative, regulatory and other initiatives, including international agreements, to reduce GHG emissions, such as carbon dioxide and methane, and proposed regulations to increase climate change reporting obligations. Significant focus is being made on companies that are active producers of fossil fuels, or companies which serve such producers.
Efforts have been made and continue to be made in the international community toward the adoption of international treaties or protocols that would address global climate change issues and impose reductions of hydrocarbon-based fuels. There are a number of legislative and regulatory proposals to address GHG emissions, including increased fuel efficiency standards, carbon taxes or cap and trade systems, restrictive permitting and incentives for renewable energy, which are in various phases of discussion or implementation. Moreover, such legislation, regulations and proposals are subject to frequent change by regulatory authorities. The outcome of Australian, Canadian and U.S. federal, regional, provincial and state actions to address global climate change could result in a variety of regulatory programs including potential new regulations, additional charges to fund energy efficiency activities or other regulatory actions. These actions could both (i) directly impact us due to increased costs associated with our operations and (ii) indirectly impact us due to increased costs of and/or reduced demand for our customers' operations and resulting reduced demand for our services.
Any adoption of these or similar proposals by Australian, Canadian or U.S. federal, regional, provincial, state or local governments mandating a substantial reduction in GHG emissions could have far-reaching and significant impacts on the energy industry, including negatively impacting the price of oil relative to other energy sources, reducing demand for hydrocarbons and other minerals or limiting drilling or mining in the areas in which we operate. Although it is not possible at this time to predict how legislation or new regulations that may be adopted to address GHG emissions would impact our business, any such future laws and regulations could result in increased compliance costs or additional operating restrictions and could have a material adverse effect on our business or demand for our services.
In addition, there have also been efforts in recent years to influence the investment community, including investment advisors and certain sovereign wealth, pension and endowment funds promoting divestment of fossil fuel equities and pressuring lenders to limit funding to companies engaged in the extraction of fossil fuel reserves. Such environmental activism and initiatives aimed at limiting climate change and reducing air pollution could interfere with our business activities, operations and ability to access capital and assess acquisitions. Furthermore, many members of the investment community, as well as political advocacy groups, are increasing their focus on ESG practices and disclosures by public companies, and concerns over climate change have resulted in, and are expected to continue to result in, the adoption of regulatory requirements relating to climate-related disclosures. As a result, we may continue to face increasing pressure regarding and focus on our ESG disclosures and practices, and mandatory reporting obligations could increase our compliance burden and costs. We update our ESG Report annually on our website, which outlines our progress and ongoing efforts to advance our ESG initiatives. Our disclosures on these matters rely on management’s expectations as of the date the statements are first made, as well as standards for measuring progress that are still in development, and may change or fail to be realized. These expectations and standards may continue to evolve. If our ESG disclosures and practices do not meet regulatory, investor or other stakeholder expectations and standards, which continue to evolve, it could have a material adverse effect on our business or demand for our services. At
the same time, some stakeholders and regulators have increasingly expressed or pursued opposing views, legislation, and investment expectations with respect to ESG, including criticizing companies for their ESG disclosures and practices and enacting or proposing “anti-ESG” legislation or policies. By updating our ESG Report annually, our business may also face increased scrutiny related to ESG activities and be unable to satisfy all stakeholders. Additionally, members of the investment community may screen our ESG disclosures and performance before investing in our common shares.
See Item 1. “Business - Government Regulation” of this annual report for a more detailed description of our climate-change related risks.
Risks Related to Our Common Shares
The market price and trading volume of our common shares may be volatile.
The market price of our common shares has historically experienced and may continue to experience volatility. For example, during 2025, the market price of our common shares ranged from a low of $18.01 per share to a high of $27.55 per share. The market price of our common shares may be influenced by many factors, some of which are beyond our control, including those described above and the following:
• changes in financial estimates by analysts and our inability to meet those financial estimates;
• strategic actions by us or our competitors;
• announcements by us or our competitors of significant contracts, acquisitions, joint marketing relationships, joint ventures or capital commitments;
• variations in our quarterly operating results and those of our competitors;
• general economic and stock market conditions;
• risks related to our business and our industry, including those discussed above;
• changes in conditions or trends in our industry, markets or customers;
• geopolitical events or terrorist acts, including cybersecurity threats;
• trading volume of our common shares;
• the majority of our common shares being held by a few shareholders;
• our policy on share repurchases and dividend payments;
• future sales of our common shares or other securities by us, members of our management team or our existing shareholders; and
• investor perceptions of the investment opportunity associated with our industry or common shares relative to other investment alternatives.
These factors may materially reduce the market price of our common shares, regardless of our operating performance. In addition, our average daily trading volume on the New York Stock Exchange has historically been low, which may result in greater price volatility.
In addition, in recent years the stock market has experienced substantial price and volume fluctuations. This volatility has had a significant effect on the market prices of securities issued by many companies for reasons potentially unrelated to their operating performance. For example, our share price may experience substantial volatility due to uncertainty regarding commodity prices. These market fluctuations, regardless of the cause, may materially and adversely affect our share price, regardless of our operating results. Price volatility may cause the average price at which we repurchase our common shares (see Note 15 – Share Repurchase Programs and Dividends for a discussion of repurchases of our common shares) in a given period to exceed the share price at a given point in time. In addition, stock market volatility may impact our ability to access the capital markets in the future on acceptable terms or at all. Furthermore, the trading market for our common shares is influenced by the research and reports that industry or securities analysts publish about us or our business. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our share price or trading volume to decline.
The repurchases of our common shares or payment of dividends are each within the discretion of our Board of Directors, and there is no guarantee that we will repurchase common shares or pay any dividends in the future or at levels anticipated by our shareholders.
The amount and timing of all future repurchases of common shares pursuant to our share repurchase program, if any, or payments of dividends are each subject to the discretion of the Board of Directors (Board) and will depend upon business conditions, results of operations, financial condition and other factors. Our Board may, without advance notice, suspend or terminate our share repurchase program or discontinue the payment of dividends. For example, in April 2025, our Board
suspended quarterly dividends on our common shares to prioritize returning capital to our shareholders through ongoing share repurchases. There can be no assurance that we will recommence dividend payments or repurchase our common shares in the future. The repurchase of shares under our share repurchase program could increase our leverage or diminish our cash reserves, which may impact our ability to finance future growth and to pursue possible future strategic growth projects. In addition, any elimination of, or downward revision in, our share repurchase program could have an adverse effect on the market price of our common shares. While the U.S. has imposed an excise tax on U.S. domestic corporations repurchasing stock, our share repurchase program is not subject to this tax. A similar 2% tax has been imposed in Canada, effective January 1, 2024, which applies to us and may impact the tax efficiency of our share repurchase program.
We are governed by the corporate laws in British Columbia, Canada which in some cases have a different effect on shareholders than the corporate laws in Delaware, U.S.
There are material differences between the Business Corporations Act (British Columbia) (BCBCA) as compared to the Delaware General Corporation Law (DGCL). Some of these material differences include the following: (i) for material corporate transactions (such as amalgamations, arrangements, the sale of all or substantially all of our undertaking, and other extraordinary corporate transactions), the BCBCA, subject to the provisions of our articles, generally requires two-thirds majority vote by shareholders, whereas DGCL generally only requires a majority vote of shareholders for similar material corporate transactions; and (ii) under the BCBCA, a holder of 5% or more of our common shares can requisition a general meeting of shareholders for the purpose of transacting any business that may be transacted at a general meeting, whereas the DGCL does not give this right. We cannot predict if investors will find our common shares less attractive because of these material differences. If some investors find our common shares less attractive as a result, there may be a less active trading market for our common shares and our share price may be more volatile.
Provisions contained in our articles and applicable Canadian and British Columbia laws could discourage a take-over attempt, which may reduce or eliminate the likelihood of a change of control transaction and, therefore, the ability of our shareholders to sell their shares for a premium.
Provisions contained in our articles provide for a classified Board (which will be phased out by the 2027 annual general meeting of shareholders), limitations on the removal of directors, limitations on shareholder proposals at meetings of shareholders and limitations on shareholder action by written consent, which could make it more difficult for a third-party to acquire control of us. Our articles, subject to the corporate law of British Columbia, also authorize our Board to issue series of preferred shares without shareholder approval. If our Board elects to issue preferred shares, it could increase the difficulty for a third-party to acquire us, which may reduce or eliminate our shareholders’ ability to sell their common shares at a premium. In addition, in Canada, we may become subject to applicable securities laws, including National Instrument 62-104 Take-Over Bids and Issuer Bids of the Canadian Securities Administrators, which provide a heightened threshold for shareholder acceptance of third-party acquisition offers and could discourage take-over attempts that could result in a premium over the market price for our common shares.
As a British Columbia company, we may be subject to additional Canadian laws and regulations. The application of additional Canadian laws and regulations could make it more difficult for third parties to acquire control of us. For example, such laws and regulations may, depending on the circumstances, result in regulatory reviews of and may require regulatory approval for any proposed take-over attempts.
Any of the foregoing could prevent or delay a change of control and may deprive or limit strategic opportunities for our shareholders to sell their common shares and/or affect the market price of our common shares.
The enforcement of civil liabilities against Civeo may be more difficult.
Civeo is a British Columbia company and a substantial portion of our assets are located outside the U.S. As a result, investors could experience more difficulty enforcing judgments obtained against us in U.S. courts than would be the case for U.S. judgments obtained against a U.S. company. In addition, some claims may be more difficult to bring against Civeo in Canadian courts than it would be to bring similar claimsagainst a U.S. company in a U.S. court.
Risks Related to Our Structure
We are subject to various Australian, Canadian and other taxes.
Our effective tax rates (including our Australian and Canadian tax rate) are dependent on a variety of factors, many of which are beyond our ability to control, such as changes in the rate of economic growth in jurisdictions in which we operate,
currency exchange rate fluctuations (especially between Australian and U.S. dollars and Canadian and U.S. dollars) and significant changes in trade, monetary or fiscal policies of Australia and Canada, including changes in interest rates, withholding taxes, tax treaties and federal and provincial tax rates generally. The impact of these factors, individually and in the aggregate, is difficult to predict, in part because the occurrence of any number of the events or circumstances described in such factors may be (and, in fact, often seem to be) interrelated, and the impact to us of the occurrence of any one of these events or circumstances could be compounded or, alternatively, reduced, offset or more than offset, by the occurrence of one or more of the other events or circumstances described in such factors.
Generally, Canada’s tax rules under the Income Tax Act (Canada) (the Canadian Tax Act) may allow for favorable tax treatment related to the repatriation of certain dividends from certain foreign affiliates. If it becomes necessary or desirable to repatriate earnings from our foreign subsidiaries, repatriating earnings could, in certain circumstances, give rise to the imposition of potentially significant withholding taxes by the jurisdictions in which such amounts were earned, without our receiving the benefit of any offsetting tax credits in Canada, which could adversely impact our effective tax rate and cash flows. These tax rules are complicated and could change over time. Any such changes could have a material impact on our overall tax rate.
Canada has also introduced tax rules governing “foreign affiliate dumping” in the Canadian Tax Act that can have adverse tax consequences in respect of non-Canadian business activities and investments for Canadian corporations that are controlled by a non-Canadian person or group of non-Canadian persons. These rules would have a negative impact on us to the extent that we became controlled by a non-Canadian person or group of non-Canadian persons.
We remain subject to changes in tax law (in various jurisdictions) and other factors that could impact our effective tax rate.
The tax laws of Australia, Canada and the U.S. could change in the future, and such changes could cause a material change in our effective corporate tax rate. As a result, our realized effective tax rate may be materially different from our current expectation. Our provision for income taxes will be based on certain estimates and assumptions made by management in consultation with our tax and other advisors. Our consolidated income tax rate will be affected by the amount of net income earned in Australia, Canada and our other operating jurisdictions, the availability of benefits under tax treaties, and the rates of taxes payable in respect of that income. We will enter into many transactions and arrangements in the ordinary course of business in respect of which the tax treatment is not entirely certain. We will therefore make estimates and judgments based on our knowledge and understanding of applicable tax laws and tax treaties, and the application of those tax laws and tax treaties to our business, in determining our consolidated tax provision. The final outcome of any audits by taxation authorities may differ from the estimates and assumptions we may use in determining our consolidated tax provisions and accruals. This could result in a material adverse effect on our consolidated income tax provision, financial condition and the net income for the period in which such determinations are made.
The U.S. Congress, government agencies in non-U.S. jurisdictions where we and our affiliates do business and the Organization for Economic Co-operation and Development (the “OECD”) continue to focus on issues related to the taxation of multinational corporations. For example, the OECD's two-pillar plan to reform international taxation remains a key initiative, with proposals to ensure a fairer distribution of profits among countries and to impose a floor on tax competition through the introduction of a global minimum tax. The tax laws of countries in which we and our affiliates do business have already begun to change based on this two-pillar plan and could change further on a prospective or retroactive basis (or both), and any such changes could materially adversely affect us.
Future potential changes to U.S. tax laws could result in Civeo being treated as a U.S. corporation for U.S. federal income tax purposes.
Although we have historically been regarded as a foreign corporation for U.S. federal income tax purposes, changes to Section 7874 of the Internal Revenue Code or the U.S. Treasury regulations promulgated thereunder, or official interpretations thereof, could adversely affect Civeo’s status as a foreign corporation for U.S. federal income tax purposes. For example, members of Congress from time to time have proposed changes to the Internal Revenue Code, and the U.S. Treasury has taken and may continue to take regulatory action, in connection with inversion transactions. The timing and substance of any such change in law or regulatory action is uncertain. Any such change of law or regulatory action could adversely impact the treatment of Civeo as a foreign corporation for U.S. federal income tax purposes and could adversely impact its tax position and financial position and results in a material manner. The precise scope and application of any legislative or regulatory proposals will not be clear until they are actually issued, and, accordingly, until such legislation or regulations are issued and fully
understood, we cannot be certain as to their potential impact. If Civeo were to be treated as a U.S. corporation for U.S. federal income tax purposes, it could be subject to substantially greater U.S. federal income tax liability.
Basis of Presentation
Unless otherwise stated or the context otherwise indicates: (i) all references in these consolidated financial statements to “Civeo,” “us,” “our” or “we” refer to Civeo Corporation and its consolidated subsidiaries; and (ii) all references in this annual report to “dollars” or “$” are to United States (U.S.) dollars.
Overview and Macroeconomic Environment
Demand for the majority of our hospitality services is driven primarily by ongoing operations of existing natural resource projects in Australia and Canada. Historically, initial demand for our hospitality services has been driven by our customers’ capital spending programs related to the construction and development of natural resource projects and associated infrastructure. Long-term demand for our services has been driven by natural resource production, maintenance, operation and expansion of those facilities. In general, industry capital spending programs are based on the outlook for commodity prices, production costs, economic growth, perceived political risk, global commodity supply/demand, reserve replacement requirements, estimates of resource production, annual maintenance requirements, inclusive of turnaround requirements, and the expectations of our customers' shareholders. As a result, demand for our hospitality services is sensitive to expected commodity prices, principally related to met coal, oil, iron ore and LNG, and the resultant impact of these commodity price expectations on our customers' spending. In addition to these historical demand drivers, there is increasing demand, of relative significance, for our assets and services tied to data center construction. This is principally occurring in the U.S. but could begin to occur in Australia and Canada as well. Other factors that can affect our business and financial results include the general global economic environment, including inflationary pressures, supply chain disruptions and labor shortages, the impact of global tariff changes and other changes to trade policies, volatility affecting the banking system and financial markets, availability of capital to the natural resource industry and regulatory changes in Australia, Canada and other markets, including governmental measures introduced to mitigate climate change.
Commodity Prices
Both oil prices and met coal prices experienced swings of greater than 10% during 2025, when compared to year end 2024 prices, with each commodity testing multi-year lows during 2025. While prices for the commodities that our customers
produce have stabilized in late 2025 and early 2026, there is risk of future volatility. The factors that could drive such volatility and underlying activity include expectations for global macroeconomic stability and growth, inflationary pressures, higher interest rates, economic growth (or contraction) in China and resultant economic stimulus by the Chinese government, the impact of changes to global tariff and trade policies, actions taken by Organization of the Petroleum Exporting Countries Plus (OPEC+) to adjust oil production levels, geopolitical events such as the ongoing conflicts in Russia/Ukraine, Venezuela and the Middle East, U.S. oil production levels and regulatory implications on such prices. In Canada, recent tensions between the U.S Administration and Canadian leadership have driven an increase in political support to fast-track infrastructure projects which could include pipelines for LNG or oil, carbon capture installation for oil producing operations and mining for critical minerals.
Recent Commodity Prices
Recent met coal, iron ore, West Texas Intermediate (WTI) crude, and Western Canadian Select (WCS) crude pricing trends are as follows:
Average Price (1)
Quarter
ended
Hard
Coking Coal
(Met Coal)
(per tonne)
Iron
Ore
(per tonne)
WTI
Crude
(per bbl)
WCS
Crude
(per bbl)
First Quarter through February 26, 2026
(1) Source: Hard coking coal prices are from IHS Markit, iron ore prices and WCS crude prices are from Bloomberg and WTI crude prices are from U.S. Energy Information Administration.
Met Coal. In Australia, 86% of our Australian owned rooms are located in the Bowen Basin of Queensland, Australia and primarily serve met coal mines in that region. Met coal pricing and production growth in the Bowen Basin region is predominantly influenced by the level of global steel production which remained subdued with quarterly year-over-year declines in each quarter of 2025. China, Europe and Japan all experienced declines in steel production in 2025, while India and the U.S. continue to see consistent positive growth over the same period. Global tariff changes, recessionfears and associated business uncertainty are weighing on current and short-term global steel production. Global steel production during 2025 decreased by 2% compared with 2024.
Met coal prices have remained between $169 and $217 per tonne during 2025, since dropping below $200 per tonne in late 2024. Early in the fourth quarter of 2025 met coal prices remained between $187 and $200 per tonne and increased progressively in December to end 2025 at $216 per tonne. Despiteweaker steel production in late 2025, the rally in prices in December 2025 is the result of limited short-term spot market supply. As of February 26, 2026, met coal spot prices were $235.45 per tonne.
With the lower met coal price environment persisting into the early part of the fourth quarter of 2025, producers continued to re-evaluate their production levels and costs. In late September 2025, several large and mid-tier producers in Queensland, Australia reported making production cuts and workforce reductions in response to pressure on operating margins. While there has been an increase in prices in late 2025, with prospective met coal supply expected to enter the market from both Australia and the U.S. in 2026, downward pressure on prices towards $200 are forecast in early 2026. Such improvements in the supply and demand fundamentals for met coal may further be impacted by ongoing geopolitical tensions associated with global tariffs and trade agreements.
Iron Ore. Iron ore prices declined to average $96.79 per tonne during 2025, down from the 2024 average of $103.77 per tonne, primarily driven by demand from steel producer restocking activity. Iron ore supply late in 2025 strengthened due to
favorable weather conditions in Brazil and is expected to strengthen further with additional supply coming to the market in early 2026. During the fourth quarter of 2025 prices remained buoyant between $99 and $106 despiteweaker steel production and increasing market supply. As further supply continues to enter the market in 2026, downward pressure on prices is forecast.
WTI Crude. In an effort to retain and recapture global market share, OPEC+ began reversing previously implemented production cuts at the beginning of the second quarter of 2025 and continuing through the fourth quarter of 2025, increasing production despite softer global demand for oil. The combined impact of these factors reduced WTI prices, which are down approximately 25% through the end of 2025 as compared to the end of 2024. Forecasts currently have oil prices averaging below $60.00 per barrel in 2026. In light of this macroeconomic backdrop, our Canadian oil sands customers are increasingly prioritizing capital discipline, pushing for lower operating costs and headcount reductions.
WCS Crude. In Canada, WCS crude is the benchmark price for our oil sands customers. Pricing for WCS is driven by several factors, including the underlying price for WTI crude, the availability of transportation infrastructure (consisting of pipelines and crude by railcar), refinery blending requirements and governmental regulation. Historically, WCS has traded at a discount to WTI, creating a “WCS Differential,” due to transportation costs and export capacity limitations to move Canadian heavy oil production to refineries, primarily along the U.S. Gulf Coast. As a result of the U.S. government’s recent takeover of the Venezuelan oil production, there is a new a concern that Venezuelan heavy crude may displace refinery demand for Canadian heavy crude on the U.S. Gulf Coast.
WCS prices in the fourth quarter of 2025 averaged $46.73 per barrel compared to an average of $57.50 in the fourth quarter of 2024. The WCS Differential decreased from $12.92 per barrel at the end of the fourth quarter of 2024 to $12.50 at the end of the fourth quarter of 2025. Further, the U.S. administration implemented and amended several new tariffs during 2025. Implementation of tariffs on oil from Canada could have an adverse impact on our Canadian customers profit margins, which may in turn reduce their spending on our accommodations and services.
Other
Qantac Acquisition . On May 6, 2025, we completed the Qantac Acquisition located in Queensland, Australia, which included four villages with 1,368 rooms in Australia’s Bowen Basin and the associated accommodation assets, land and customer contracts. See Note 19. Asset Acquisition to the notes to the consolidated financial statements in Item 8 of this annual report for further discussion.
Inflationary Pressures. Since 2023, price increases resulting from pandemic-related inflation and supply chain concerns have, and are expected to continue to have, a negative impact on our labor and food costs, as well as consumable costs such as fuel. Lingering inflation from the pandemic has recently been exacerbated by changes to global tariffs and trade policies. We are managing inflation risk with negotiated service scope changes and contractual protections. Although inflation resulting from global tariffs implemented or threatened by the U.S. administration, and the resulting retaliations by its trading partners, did not materially impact our cost structure in 2025, concerns remain that inflationary pressures could return in the future.
Labor Shortages. In addition to the macro inflationary impacts on labor costs noted above, we continue to be impacted by increased staff costs as a result of hospitality labor shortages in Australia. Australia’s labor market remains historically tight, with unemployment holding just above 4% and job mobility (movement of workers between different employers or businesses) at its lowest in 30 years. A persistent overhang of vacancies continues to constrain recruitment, while government stimulus has disproportionately driven job growth in healthcare, aged care, education and public services. Despiteeasing inflation, regulated labor costs remain high, with the Fair Work Commission decisions pushing wage increases well above Consumer Price Index changes, and statutory increases in superannuation, workers’ compensation and payroll tax are further inflating total labor costs. For hospitality, this combination of scarce labor supply, competition from government-funded sectors and rising employment costs creates sustained pressure on staffing productivity and availability.
LNG. Our Sitka Lodge supports the LNG Canada (LNGC) project and related pipeline projects (specifically, the Coastal GasLink Pipeline, the pipeline constructed to transport natural gas feedstock to LNGC). Construction activity of Phase 1 of the Kitimat LNG Facility has been completed and commercial operations commenced at the end of June 2025. The Coastal GasLink Pipeline was completed in 2024. As such, we expect continued lower occupancy at our Sitka Lodge in the near-term until subsequent phases of the LNGC project are approved and commence, or additional construction activity in the region, drive increased occupancy demand.
From a macroeconomic standpoint, LNG demand has continued to grow, 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. The conflicts between Russia/Ukraine and in the Middle East have further highlighted the need for secure natural gas supply globally, particularly in Europe. Accordingly, we expect additional investment in LNG supply will be needed to meet the resulting expected long-term LNG demand growth.
United States Business. In the first quarter of 2023, we sold our accommodation assets in Louisiana, and in the second quarter of 2024, we sold the land at our Louisiana location. Our remaining U.S. business, which supported completion activity in the Bakken, was closed in the fourth quarter of 2024 due to low activity levels.
Foreign Currency Exchange Rates. Exchange rates between the U.S. dollar and each of the Australian dollar and the Canadian dollar influence our U.S. dollar reported financial results. Our business has historically derived the vast majority of its revenues and operating income (loss) in Australia and Canada. These revenues and profits/losses are translated into U.S. dollars for financial reporting purposes under U.S. generally accepted accounting principles. The following summarizes the fluctuations in the exchange rates between the U.S. dollar and each of the Australian dollar and the Canadian dollar:
Year Ended December 31,
Change
Percentage
Average Australian dollar to U.S. dollar
Average Canadian dollar to U.S. dollar
As of December 31,
Change
Percentage
Australian dollar to U.S. dollar
Canadian dollar to U.S. dollar
These fluctuations of the Australian and Canadian dollars have had and will continue to have an impact on the translation of earnings generated from our Australian and Canadian subsidiaries and, therefore, our financial results.
Capital Expenditures. We continue to monitor the global economy, commodity prices, demand for met coal, oil, iron ore and LNG, inflation, trade policy and the resultant impact on the capital spending plans of our customers in order to plan our business activities. We currently expect that our 2026 capital expenditures will be in the range of approximately $25 million to $30 million, of which $20 million is anticipated to relate to maintenance and $10 million related to growth and strategic initiatives, including investments in information technology infrastructure to support our business. This compares to 2025 capital expenditures of $20.2 million, of which $11.2 million is associated with maintenance and $9.0 million related to growth projects, including the reactivation of our Buffalo Lodge in Canada and Wi-Fi infrastructure improvements in Australia. We may adjust our capital expenditure plans in the future as we continue to monitor customer activity.
See “Liquidity and Capital Resources ” below for further discussion on 2026 and 2025 capital expenditures.
Results of Operations
Unless otherwise indicated, discussion of results for the year ended December 31, 2025 is based on a comparison with the corresponding period of 2024.
Results of Operations – Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
Year Ended
December 31,
Change
($ in thousands)
Revenues
Australia
Canada
Other
Total revenues
Costs and expenses
Cost of sales and services
Australia
Canada
Other
Total cost of sales and services
Selling, general and administrative expenses
Depreciation and amortization expense
Impairment expense
Gain on sale of McClelland Lake Lodge assets, net
Other operating (income) expense
Total costs and expenses
Operating income
Interest expense, net
Other income
Loss before income tax
Income tax expense
Net loss
Less: Net loss attributable to noncontrolling interest
Net loss attributable to Civeo Corporation
We reported net loss attributable to Civeo for 2025 of $20.1 million, or $1.59 per diluted share. As further discussed below, net loss included $5.5 million of shareholder activist related costs and $2.2 million of cost saving initiatives in Canada related to severance, two lodge closures and other real estate rationalization efforts.
We reported net loss attributable to Civeo for 2024 of $17.1 million, or $1.19 per diluted share. As further discussed below, net loss included $5.7 million of net gains associated with the sale of McClelland Lake Lodge in Canada and a $11.6 million pre-tax loss resulting from the impairment of fixed assets included in Impairment expense.
Revenues. Consolidated revenues decreased $43.3 million, or 6%, in 2025 compared to 2024. This decrease was primarily driven by (i) lower billed rooms at our oil sands lodges in Canada as producers in the region remain focused on reducing operating costs, (ii) reduced occupancy at our Sitka Lodge in Canada beginning in the third quarter of 2024 as the Kitimat LNG facility was nearing completion and subsequently commenced operations in the second quarter of 2025, (iii) reduced food service and other services revenue in Canada as client maintenance work in 2024 did not recur to the same extent in 2025 and (iv) a weaker Australian and Canadian dollar relative to the U.S. dollar in 2025 compared to 2024. These items were partially offset by an increase in Australia related to the Qantac Acquisition in the second quarter of 2025 and new business in our integrated services villages in Western Australia and Queensland. The assets from the Qantac Acquisition generated $20.2 million of revenues in 2025. See below for further discussion of segment results of operations.
Cost of Sales and Services. Our consolidated cost of sales and services decreased $44.9 million, or 8.4%, in 2025 compared to 2024. This decrease was primarily due to (i) lower costs at various lodges in Canada due to reduced occupancy
levels, (ii) reduced costs at various lodges and reduced indirect costs as a result of various cost reduction measures in Canada implemented in late 2024 and early 2025, (iii) lower costs related to the reduced mobile asset activity in Canada from pipeline projects for which final costs were incurred in the first six months of 2024, (iv) reduced food service and other services costs in Canada as client maintenance work in 2024 did not recur to the same extent in 2025 and (v) a weaker Australian and Canadian dollar relative to the U.S. dollar in 2025 compared to 2024. These items were partially offset by an increase in Australia related to the Qantac Acquisition in the second quarter of 2025 and new business in our integrated services villages in Western Australia and Queensland and associated overhead costs. See below for further discussion of segment results of operations.
Selling, General and Administrative Expenses. SG&A expense increased $2.0 million, or 3%, in 2025 compared to 2024. This increase was primarily due to higher professional fees of $4.9 million due to shareholder activist related costs of $5.5 million in 2025 compared to 2024, partially offset by lower travel and entertainment costs of $1.1 million, down 38% year-of-year, lower office expenses of $1.1 million, lower incentive compensation cost of $0.9 million and a weaker Australian and Canadian dollar relative to the U.S. dollar in 2025 compared to 2024.
Depreciation and Amortization Expense. Depreciation and amortization expense increased $4.6 million, or 7%, in 2025 compared to 2024. The increase was primarily due to additional property, plant and equipment acquired through the Qantac Acquisition and shortening the lives on certain assets in Canada, partially offset by a weaker Australian and Canadian dollar relative to the U.S. dollar in 2025 compared to 2024 and reduced depreciation expense resulting from impairments recorded in 2024.
Impairment Expense. We recorded pre-tax impairment expense of $11.6 million in 2024 associated with long-lived assets in Australia and the U.S.
See Note 4 - Impairment Charges to the notes to the consolidated financial statements included in Item 8 of this annual report for further discussion.
Gain on Sale of McClelland Lake Lodge Assets, net. We recorded $5.7 million in net gains associated with the sale of the McClelland Lake Lodge in 2024.
Operating Income. Operating income increased $2.8 million, or 209%, in 2025 compared to 2024 primarily due to higher activity levels in Australia in 2025 compared to 2024 and impairment expenses recorded in 2024. These items were partially offset by lower lodge occupancy in Canada, higher depreciation and amortization expense and higher SG&A expense in 2025 compared to 2024. In addition, 2024 included a net gain on sale of McClelland Lake Lodge assets.
Interest Expense, net. Net interest expense increased $3.5 million, or 45%, in 2025 compared to 2024, primarily related to higher average debt levels, partially offset by lower interest rates on credit facility borrowings in 2025 compared to 2024.
Income Tax Expense. Our income tax expense for 2025 totaled $13.6 million, or (211.0)% of pretax loss, compared to an expense of $12.5 million, or (210.4)% of pretax loss for 2024. Our effective tax rate for 2025 and 2024 was lower than the Canadian federal statutory rate of 15% primarily due to pre-tax losses in Canada and the U.S. with no corresponding tax benefit. Full valuation allowances are maintained against net deferred tax assets in both Canada and the U.S. In 2025, the tax benefit in Canada and the U.S. was offset by an increase to the valuation allowance of $10.6 million.
Other Comprehensive Income (Loss). Other comprehensive income increased $37.8 million in 2025 compared to 2024 primarily as a result of foreign currency translation adjustments due to changes in the Australian and Canadian dollar exchange rates compared to the U.S. dollar. The Australian dollar exchange rate compared to the U.S. dollar increased 7.7% in 2025 compared to a 9.0% decrease in 2024. The Canadian dollar exchange rate compared to the U.S. dollar increased 5.0% in 2025 compared to an 8.1% decrease in 2024.
Segment Results of Operations – Australian Segment
Year Ended
December 31,
Change
Revenues ($ in thousands)
Accommodation and associated services revenue (1)
Integrated services and other services revenue (2)
Total revenues
Cost of sales ($ in thousands)
Accommodation and associated services cost
Integrated services and other services cost
Indirect other cost
Total cost of sales and services
Gross margin as a % of revenues
Average daily rate for owned villages (3)
Total billed rooms for owned villages (4)
Australian dollar to U.S. dollar
(1) Includes revenues related to village rooms and hospitality services for owned rooms for the periods presented.
(2) Includes revenues related to food service and other services, including facilities management, for the periods presented.
(3) Average daily rate is based on billed rooms and accommodation revenue in the Company's owned villages.
(4) Billed rooms represents total billed days for owned assets for the periods presented.
Our Australian segment reported revenues in 2025 that were $33.3 million, or 8%, higher than in 2024. The weakening of the average exchange rate for the Australian dollar relative to the U.S. dollar by 2.3% in 2025 compared to 2024 resulted in a $10.5 million period-over-period decrease in revenues. On a constant currency basis, the Australian segment experienced a 10.3% period-over-period increase in revenues. Excluding the impact of the weaker Australian exchange rate, the increase in the Australian segment was driven by the Qantac Acquisition in the second quarter of 2025 and new business in our integrated services villages in Western Australia and Queensland.
Our Australian segment cost of sales and services increased $24.1 million, or 8%, in 2025 compared to 2024. The weakening of the average exchange rate for the Australian dollar relative to the U.S. dollar by 2.3% in 2025 compared to 2024 resulted in a $7.7 million period-over-period decrease in cost of sales and services. Excluding the impact of the weaker Australian exchange rate, the increase in cost of sales and services in the Australian segment was largely driven by the Qantac Acquisition and new business in our integrated services villages in Western Australia and Queensland and the associated overhead costs.
Our Australian segment gross margin as a percentage of revenues increased from 26.1% in 2024 to 26.3% in 2025. This was primarily driven by increased relative contribution from our accommodation business associated with the Qantac Acquisition and improvedprofitability across our integrated services villages in 2025. Our accommodation business generates higher gross margins than our integrated services business which has a service-only business model.
Segment Results of Operations – Canadian Segment
Year Ended
December 31,
Change
Revenues ($ in thousands)
Accommodation and associated services revenue (1)
Mobile facility rental and associated services revenue (2)
Integrated services and other services revenue (3)
Total revenues
Cost of sales and services ($ in thousands)
Accommodation and associated services cost
Mobile facility rental and associated services cost
Integrated services and other services cost
Indirect other cost
Total cost of sales and services
Gross margin as a % of revenues
Average daily rate for owned lodges (4)
Total billed rooms for owned lodges (5)
Average Canadian dollar to U.S. dollar
(1) Includes revenues related to lodge rooms and hospitality services for owned rooms for the periods presented.
(2) Includes revenues related to mobile assets for the periods presented.
(3) Includes revenues related to food service, laundry and water and wastewater treatment services for the periods presented.
(4) Average daily rate is based on billed rooms and accommodation revenue in the Company's owned lodges.
(5) Billed rooms represents total billed days for owned assets for the periods presented.
Our Canadian segment reported revenues in 2025 that were $66.5 million, or 27%, lower than 2024. The weakening of the average exchange rate for the Canadian dollar relative to the U.S. dollar by 2.0% in 2025 compared to 2024 resulted in a $3.6 million period-over-period decrease in revenues. Excluding the impact of the weaker Canadian exchange rate, the revenue decrease was driven by (i) lower billed rooms at our oil sands lodges, down 29% year-over-year, as producers in the region remain focused on reducing operating costs, (ii) reduced occupancy at our Sitka Lodge beginning in the third quarter of 2024 as the Kitimat LNG facility was nearing completion and subsequently commenced operations in the second quarter of 2025 and (iii) lower food service and other services revenue as client maintenance work in 2024 did not recur to the same extent in 2025.
Our Canadian segment cost of sales and services decreased $59.1 million, or 29%, in 2025 compared to 2024. The weakening of the average exchange rate for the Canadian dollar relative to the U.S. dollar by 2.0% in 2025 compared to 2024 resulted in a $3.1 million period-over-period decrease in cost of sales and services. Excluding the impact of the weaker Canadian exchange rate, the decrease in cost of sales and services was largely driven by (i) lower costs at various lodges due to reduced occupancy levels, (ii) reduced costs at various lodges and reduced indirect costs as a result of various cost reduction measures implemented in late 2024 and early 2025, (iii) lower costs related to the reduced mobile asset activity from pipeline projects for which final costs were incurred in the first six months of 2024 and (iv) reduced food service and other services costs as client maintenance work in 2024 did not recur to the same extent in 2025.
Our Canadian segment gross margin as a percentage of revenues increased from 15.5% in 2024 to 17.1% in 2025. This was primarily driven by final costs for pipeline projects in 2024 that did not recur in 2025 and various cost reduction measures implemented in late 2024 and early 2025 impacting indirect costs.
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 and purchasing or leasing land, to repurchase common shares, to pay dividends and for general working capital needs. In addition, capital has been used to repay debt and fund strategic business acquisitions. Historically, our primary sources of funds have been available cash, cash flow from operations, borrowings under
our Credit Agreement and proceeds from equity issuances. In the future, we may seek to access the debt and equity capital markets from time to time to raise additional capital, increase liquidity, fund acquisitions or refinance debt.
The following summarizes our material future cash requirements at December 31, 2025, and the effect such obligations are expected to have on our liquidity and cash flow over the next five years (in thousands):
(1) Interest payments due under the Credit Agreement, which matures on August 8, 2028; based on an interest rate of 5.9% for Canadian revolver borrowings.
Our debt obligations at December 31, 2025 are reflected in our consolidated balance sheet, which is a part of our consolidated financial statements in Item 8 of this annual report. We have not entered into any material leases subsequent to December 31, 2025.
The following summarizes our consolidated liquidity position as of December 31, 2025 and 2024 (in thousands):
December 31,
Lender commitments
Reductions in availability (1)
Borrowings against revolving credit capacity
Outstanding letters of credit
Unused availability
Cash and cash equivalents
Total available liquidity
(1) As of December 31, 2025 and 2024, $5.3 million and $3.6 million, respectively, of our borrowing capacity under the Credit Agreement could not be utilized in order to maintain compliance with the maximum leverage ratio financial covenant in the Credit Agreement.
Cash totaling $22.3 million was provided by operations during 2025 compared to $83.5 million provided by operations during 2024. During 2025 and 2024, $28.9 million was used in working capital and $31.8 million was provided by working capital, respectively. The year-over-year increase in cash used in working capital in 2025 compared to 2024 is largely due to higher cash taxes paid in Australia in 2025 compared to 2024 and the collection of receivables in Canada related to the completion of mobile asset pipeline projects 2024 that did not recur in 2025. These items were partially offset by a decrease in cash used for accounts payable and accrued liabilities during 2025 compared to 2024.
Cash used in investing activities during 2025 totaled $90.1 million compared to cash used in investing activities during 2024 of $14.9 million. The increase in cash used in investing activities was primarily due to the Qantac Acquisition and lower proceeds from the sale of property, plant and equipment, partially offset by lower capital expenditures. We received net proceeds from the sale of property, plant and equipment of $2.2 million during 2025 related to the sale of accommodation assets in Canada compared to $11.0 million during 2024 related to the sale of our McClelland Lake Lodge accommodation assets in Canada and the sale of our Louisiana land in the U.S. Capital expenditures totaled $20.2 million and $26.1 million during 2025 and 2024, respectively. Capital expenditures in both periods were primarily related to maintenance. In addition, our 2024 capital expenditures included approximately $2.9 million related to customer-funded infrastructure upgrades in Australia.
We expect our capital expenditures for 2026 to be in the range of $25 million to $30 million, which excludes any unannounced and uncommitted projects, the spending for which is contingent on obtaining customer contracts or commitments or attractive risk-adjusted economics. Whether planned expenditures will actually be spent in 2026 depends on industry
conditions, project approvals and schedules, customer room commitments and project and construction timing. We expect to fund these capital expenditures with available cash, cash flow from operations and revolving credit borrowings under our Credit Agreement. The foregoing capital expenditure forecast does not include any funds for strategic acquisitions, which we could pursue should the transaction economics be attractive enough to us compared to the current capital allocation priorities of returning capital to shareholders. We continue to monitor the global economy, commodity prices, demand for met coal, crude oil, LNG and iron ore, inflation 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.
The table below delineates historical capital expenditures split between expansionary and maintenance spending on our lodges and villages, mobile asset spending and other capital expenditures. We classify capital expenditures for the development of rooms and central facilities at our lodges and villages as expansion capital expenditures. Other capital expenditures below relate to routine capital spending for support equipment, upgrades to infrastructure at our lodge and village properties and spending related to our manufacturing facilities, among other items.
Based on management’s judgment of capital spending classifications, we believe the following represents the components of capital expenditures and the associated percentage of revenue for the years ended December 31, 2025 and 2024 (in millions):
Year Ended December 31,
Expansion
% Rev
Maint
% Rev
Total
% Rev
Expansion
% Rev
Maint
% Rev
Total
% Rev
Lodge/village
Other
Total
Expansion lodge and village spending in 2025 was primarily related to final costs associated with the reactivation of our Buffalo Lodge in Canada, as well as purchases supporting new contracts at our integrated services business and the Qantac Acquisition in Australia. Expansion lodge and village spending in 2024 was primarily related to costs associated with the customer-supported reactivation of our Buffalo Lodge in Canada and customer-funded infrastructure upgrades at three Australian villages.
Maintenance lodge and village spending in 2025 and 2024 was primarily associated with routine maintenance projects at our major properties.
Other maintenance and expansion spending in 2025 was primarily related to Wi-Fi infrastructure at certain Australian villages, miscellaneous equipment and supplies to support the day-to-day operations at our accommodation facilities and information technology infrastructure to support our business. Other maintenance and expansion spending in 2024 was primarily related to miscellaneous equipment and supplies to support the day-to-day operations at our accommodation and laundry facilities, purchases to support new contacts at our integrated services business in Australia and information technology infrastructure to support our business.
Cash provided by financing activities during 2025 of $74.7 million was primarily due to net borrowings under our revolving credit facilities of $132.8 million primarily to fund the Qantac Acquisition and share repurchases, partially offset by (i) repurchases of our common shares of $53.6 million, (ii) dividend payments of $3.4 million, (iii) payments to settle tax obligations of $0.6 million and (iv) debt issuance costs of $0.4 million. Cash used in financing activities during 2024 of $65.2 million was primarily due to (i) repurchases of our common shares of $29.6 million, (ii) net repayments under our revolving credit facilities of $17.1 million, (iii) dividend payments of $14.4 million, (iv) debt issuance costs of $3.0 million and (v) payments to settle tax obligations of $1.1 million.
The following summarizes the changes in debt outstanding during 2025 (in thousands):
Total
Balance as of December 31, 2024
Borrowings under revolving credit facilities
Repayments of borrowings under revolving credit facilities
Translation
Balance at December 31, 2025
We believe that cash on hand and cash flow from operations will be sufficient to meet our anticipated liquidity needs for the next 12 months. If our plans or assumptions change, including as a result of changes in our customers' capital spending or changes in the price of and demand for natural resources, or are inaccurate, or if we make acquisitions, we may need to raise additional capital. Selectively pursuing strategic organic and inorganic growth opportunities that fit with our current capital allocation priorities of returning capital to shareholders has been, and our management believes will continue to be, an element of our long-term business strategy. The timing, size or success of any growth opportunities and the associated potential capital commitments are unpredictable and uncertain. We may seek to fund all or part of any such efforts with proceeds from debt and/or equity issuances or may issue equity directly to the sellers. Our ability to obtain capital for additional projects to implement our growth strategy over the longer term will depend on our future operating performance, financial condition and, more broadly, on the availability of equity and debt financing. Capital availability will be affected by prevailing conditions in our industry, the global economy, the global financial markets and other factors, many of which are beyond our control. In addition, any additional debt service requirements we take on could be based on higher interest rates and shorter maturities and could impose a significant burden on our results of operations and financial condition, and the issuance of additional equity securities could result in significant dilution to shareholders.
In September 2024, our Board authorized a common share repurchase program (the Share Repurchase Program) to repurchase up to 5.0% of our total common shares which are issued and outstanding at that date, or 0.7 million common shares, over a twelve-month period. In March 2025, our Board authorized an increase to the Share Repurchase Program to repurchase up to 10.0% of our total common shares which are issued and outstanding at that date, or 1.4 million common shares, and in April 2025, our Board authorized a further increase to repurchase up to 20.0% of our total common shares which are issued and outstanding at that date, or approximately 2.7 million common shares (the 2025 Share Repurchase Program). The 2025 Share Repurchase Program does not expire.
In addition, our Board declared quarterly dividends of $0.25 per common share to shareholders beginning in the third quarter of 2023 through the first quarter of 2025. Dividend payments of $3.4 million, $14.3 million and $7.4 million were made to shareholders in 2025, 2024 and 2023, respectively. These dividends are eligible dividends pursuant to the Income Tax Act (Canada). See Note 15 – Share Repurchase Programs and Dividends to the notes to the consolidated financial statements included in Item 8 of this annual report for further discussion.
Credit Agreement
As of December 31, 2025, the Credit Agreement provided for: (i) a $265.0 million revolving credit facility scheduled to mature on August 8, 2028, allocated as follows: (A) a $10.0 million senior secured revolving credit facility in favor of certain of our U.S. subsidiaries, as borrowers; (B) a $200.0 million senior secured revolving credit facility in favor of Civeo and certain of our U.S. subsidiaries, as borrowers; and (C) a $55.0 million senior secured revolving credit facility in favor of one of our Australian subsidiaries, as borrower.
As of December 31, 2025, we had outstanding letters of credit of zero under the U.S. facility, zero under the Australian facility and $0.9 million under the Canadian facility. We also had outstanding bank guarantees of A$1.4 million under the Australian facility.
See Note 10 - Debt to the notes to the consolidated financial statements in Item 8 of this annual report for the terms of the Credit Agreement and further discussion regarding our debt.
Dividends
In April 2025, our Board suspended quarterly dividends on our common shares to prioritize returning capital to our shareholders through ongoing share repurchases. The declaration and amount of any potential future dividends will be at the discretion of our Board and will depend upon many factors, including our financial condition, results of operations, cash flows, prospects, industry conditions, capital requirements of our business, covenants associated with certain debt obligations, legal requirements, regulatory constraints, industry practice and other factors the Board deems relevant. In addition, our ability to pay cash dividends on common 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 any dividends are declared in the future, the amount per share of our dividend payments may be changed, or dividends may again 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 any dividends in the future.
Critical Accounting Policies and Estimates
Our consolidated financial statements in Item 8 of this annual report have been prepared in accordance with U.S. generally accepted accounting principles (GAAP), which require that management make numerous estimates and assumptions. Actual results could differ from those estimates and assumptions, thus impacting our reported results of operations and financial position. The critical accounting policies and estimates described in this section are those that are most important to the depiction of our financial condition and results of operations and the application of which requires management’s most subjective judgments in making estimates about the effect of matters that are inherently uncertain. We describe our significant accounting policies more fully in Note 2 - Summary of Significant Accounting Policies to the notes to consolidated financial statements in Item 8 of this annual report.
Impairment of Definite-Lived Tangible and Intangible Assets
The recoverability of the carrying values of tangible and intangible assets is assessed at an asset group level which represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Whenever, in management’s judgment, we review our assets for impairment in step one when events or changes in circumstances indicate that the carrying value of such asset groups may not be recoverable based on estimated future cash flows, an asset impairment evaluation is performed. Indicators of impairment might include persistent and sustained negative economic trends affecting the markets we serve, recurring cash flow losses or significantly lowered expectations of future cash flows expected to be generated by our assets. As part of the initial step, we also reevaluate the remaining useful lives and salvage values of our assets when indicators of impairment exist.
Identification of Asset Groups – The following summarizes the asset groups that we have identified in each of our reporting segments.
Our Canada segment consists of numerous lodges, as well as our mobile assets. These properties are grouped in the following asset groups:
• Core Region
◦ Fort McMurray Village – North Athabasca
◦ Beaver River Lodge – North Athabasca
◦ Athabasca Lodge – North Athabasca
◦ Hudson and Borealis Lodges – North Athabasca
• Wapasu Creek Lodge – North Athabasca
• Grey Wolf Lodge - North Athabasca
• Conklin Lodge – South Athabasca
• Anzac Lodge – South Athabasca
• Red Earth Lodge - South Athabasca
• Wabasca Lodge - South Athabasca
• Sitka Lodge – Kitimat, British Columbia
• Geetla camp – British Columbia
• Antler River camp – Manitoba
• Red Earth camp – Alberta
• Christina Lake camp – Alberta
• Mobile assets
• Various land holdings in British Columbia purchased in anticipation of potential LNG related projects
In general, the lodges are operated on a lodge-by-lodge basis. However, for one set of lodges (the Core Region, including Beaver River, Athabasca, Hudson and Borealis Lodges and Fort McMurray Village), there are no identifiable cash flows largely independent of the cash flows of other assets and liabilities for such lodges, and therefore, such lodges are combined into a single asset group. Factors such as proximity to each other, commonality of customers, common monitoring by management and operating decisions being made to optimize these lodges as a group result in these lodges being treated as a single asset group for the purposes of our impairment assessments.
Our Australia segment consists of various villages in several regions within the country, as well as our integrated services assets and land banked assets. These properties are grouped in the following asset groups:
• Karratha – Pilbara Region, Western Australia
• Integrated services – Assets held on client owned sites in Western Australia and South Australia
• Gunnedah Basin
◦ Narrabri – Gunnedah Basin, New South Wales
◦ Boggabri – Gunnedah Basin, New South Wales
• Bowen Basin
◦ Moranbah – Bowen Basin, Queensland
◦ Dysart – Bowen Basin, Queensland
◦ Nebo – Bowen Basin, Queensland
◦ Coppabella – Bowen Basin, Queensland
◦ Middlemount – Bowen Basin, Queensland
◦ Rosewood – Bowen Basin, Queensland
◦ Waratah – Bowen Basin, Queensland
◦ Vitrinite – Bowen Basin, Queensland
◦ Acacia – Bowen Basin, Queensland
• Various non-operational sites acquired as part of Civeo’s land-banking strategy
In general, the villages are operated on a village-by-village basis, except for the villages located in the Bowen Basin (Moranbah, Dysart, Nebo, Coppabella, Middlemount, Rosewood, Waratah, Vitrinite and Acacia) and the Gunnedah Basin (Narrabri and Boggabri). The villages in the Bowen and Gunnedah Basins contain significant levels of interdependency that allow these assets to be combined into cash generating units (asset groups). Factors such as commonality of customers, location, resource basins served and common monitoring by management result in the Bowen and Gunnedah Basins to be treated as single asset groups for the purposes of our impairment assessments. Integrated services assets provide catering and managed services to the mining industry in Western Australia and South Australia.
U.S. consists of a lodge, land and a wastewater treatment plant (WWTP). These properties are grouped in the following asset groups:
• Killdeer Lodge – North Dakota
• Killdeer WWTP – this asset group represents a WWTP in Killdeer, North Dakota, which was constructed in early 2014
Recoverability Assessment – In performing an impairment analysis, the second step is to compare each asset group’s carrying value to estimates of undiscounted future direct cash flows associated with the asset group over the remaining useful life of the asset group's primary asset. We use a variety of underlying assumptions to estimate these future cash flows, including assumptions relating to future economic market conditions, rates, occupancy levels, costs and expenses and capital expenditures. The estimates are consistent with those used for purposes of our goodwill impairment test.
Fair Value Determination – If, based on the assessment, the carrying values of any of our asset groups are determined to not be recoverable as a result of the undiscounted future cash flows not exceeding the net book value of the asset group, we proceed to the third step. In this step, we compare the fair value of the respective asset group to its carrying value. Our estimate of the fair value requires us to use significant unobservable inputs, representative of Level 3 fair value measurements, including numerous assumptions with respect to future circumstances, such as industry and/or local market conditions that might directly impact each of the asset groups’ operations in the future, and are therefore uncertain. In some cases our estimate of fair value is based on appraisals from third parties.
Our industry is cyclical and our estimates of the period over which future cash flows will be generated, as well as the predictability of these cash flows and our determination of whether a decline in value of our investment has occurred, can have a significant impact on the carrying value of these assets and, in periods of prolonged down cycles, may result in impairmentlosses. If this assessment indicates that the carrying values will not be recoverable, an impairmentloss is recognized equal to the excess of the carrying value over the fair value of the asset group. The fair value of the asset group is based on prices of similar assets, if available, or discounted cash flows.
In estimating future cash flows, we make numerous assumptions with respect to future circumstances that might directly impact each of the asset groups’ operations in the future and are therefore uncertain. These assumptions with respect to future circumstances include future oil and coal prices, anticipated customer spending, and industry and/or local market conditions. These assumptions represent our best judgment based on the current facts and circumstances. However, different assumptions could result in a determination that the carrying values of additional asset groups are no longer recoverable based on estimated future cash flows. Our estimate of fair value is primarily calculated using the Income Approach, which derives a present value of the asset group based on the asset groups’ estimated future cash flows. We discounted our estimated future cash flows using a long-term weighted average cost of capital based on our estimate of investment returns required by a market participant.
See Note 4 – Impairment Charges to the notes to consolidated financial statements in Item 8 of this annual report for further discussion of impairments of definite-lived tangible and intangible assets recorded in the years ended December 31, 2025, 2024 and 2023.
Revenue and Cost Recognition
We generally recognize accommodation, mobile facility rental, food service and other services revenues over time as our customers simultaneously receive and consume benefits as we serve our customers because of continuous transfer of control to the customer. Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. We transfer control and recognize a sale based on a periodic (usually daily) room rate each night when a customer stays in our rooms or when the services are rendered. In some contracts, rates may vary over the contract term. In these cases, revenue may be deferred and recognized on a straight-line basis over the contract term.
Because of control transferring over time, the majority of our revenue is recognized based on the extent of progress towards completion of the performance obligation. At contract inception, we assess the goods and services promised in our contracts with customers and identify a performance obligation for each promise to transfer our customers a good or service (or bundle of goods or services) that is distinct. Our customers typically contract for hospitality services under take-or-pay contracts with terms that range from several months to multiple years. Our contract terms generally provide a rental rate for a reserved room and an occupied room rate that compensates us for services provided. We typically contract our facilities to our customers on a fee per day basis where the goods and services promised include lodging and meals. To identify the performance obligations, we consider all of the goods and services promised in the context of the contract and the pattern of transfer to our customers.
Revenues exclude taxes assessed based on revenues such as sales or value added taxes.
Cost of services includes labor, food, utility costs, cleaning supplies, and other costs of operating our accommodations assets. Cost of goods sold includes all direct material and labor costs and those costs related to contract performance, such as indirect labor, supplies, tools and repairs. Selling, general and administrative costs are charged to expense as incurred.
Income Taxes
We follow the liability method of accounting for income taxes in accordance with current accounting standards regarding the accounting for income taxes. Under this method, deferred income taxes are recorded based upon the differences between the
financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws in effect at the time the underlying assets or liabilities are recovered or settled.
When our earnings from foreign subsidiaries are considered to be indefinitely reinvested, no provision for Canadian income taxes is made for these earnings. If any of the subsidiaries have a distribution of earnings in the form of dividends or otherwise, we could be subject to both Canadian income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to various foreign countries.
We record a valuation allowance in each reporting period when our management believes that it is more likely than not that any recorded deferred tax asset will not be realized. Our management will continue to evaluate the appropriateness of the valuation allowance in the future, based upon our current and historical operating results and other potential sources of future taxable income. See Note 13 – Income Taxes to the notes to consolidated financial statements in Item 8 of this annual report for further discussion.
In accounting for income taxes, we are required to estimate a liability for future income taxes for any uncertainty for potential income tax exposures. The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations. We recognize liabilities for anticipated tax audit issues in Canada and other tax jurisdictions based on our estimate of whether, and the extent to which, additional taxes will be due, including an accrual of interest and penalties, if applicable, related to the unrecognized tax benefits. If we ultimately determine that payment of these amounts is unnecessary, we reverse the liability and recognize a tax benefit during the period in which we determine that the liability is no longer necessary. We record an additional charge in our provision for taxes in the period in which we determine that the recorded tax liability is less than we expect the ultimate assessment to be.
Recent Accounting Pronouncements
See Note 2 – Summary of Significant Accounting Policies – Recent Accounting Pronouncements to the notes to consolidated financial statements in Item 8 of this annual report for further discussion.
