Leases (Notes)

12 Months Ended

Dec. 31, 2020

Leases [Abstract]

Leases

We lease certain facilities, land, vehicles, and equipment. Leases with an initial term of 12 months or less (“short-term leases”) are not recorded on the balance sheet (including short-term sale leaseback transactions); we recognize lease expense for these leases on a straight-line basis over the lease term.

We have data center lease agreements with lease and non-lease components which are accounted for separately, while for the remainder of our agreements we have elected the practical expedient to account for lease and non-lease components as a single lease component. For certain equipment leases, such as copiers and vehicles, we account for the leases under a portfolio method. Operating lease payments include related options to extend or terminate lease terms that are reasonably certain of being exercised.

The unmanned equipment that we lease to customers under operating leases consists primarily of drilling rental tools and artificial lift pumping equipment. These equipment rental revenues are generally provided based on call-out work orders that include fixed per unit prices and are derived from short-term contracts. See “Note 1 – Summary of Significant Accounting Policies” and “Note 23 – Revenues” for additional details on our equipment rental revenues.

	Successor				Predecessor
			Period From		Period From
	Year		12/14/2019		1/1/2019
	Ended		through		through
(Dollars in millions)	12/31/2020		12/31/2019		12/13/2019
Lease Expense Components:
Operating Lease Expense	$	76	$	5	$	109
Short-term and Variable Lease Expense	63		5		91
Subtotal of Operating Lease Expense	$	139	$	10	$	200
Finance Lease Expense: Amortization of ROU Assets and Interest on Lease Liabilities	15		1		11
Sublease Income	(6)		(1)		(6)
Total Lease Expense	$	148	$	10	$	205

Lease expense incurred under operating leases was $187 million for the Predecessor year ended December 31, 2018.

We are committed under various operating lease agreements primarily related to office space and equipment. Generally, these leases include renewal provisions and rental payments, which may be adjusted for taxes, insurance and maintenance related to the property. Future minimum commitments under operating and finance leases are as follows:

	Operating		Finance
(Dollars in millions)	Leases		Leases
Maturity of Lease Liabilities as of December 31, 2020:
2021	$	91	$	14
2022	69		12
2023	39		12
2024	28		11
2025	22		11
After 2025	131		14
Total Lease Payments	380		74
Less: Interest	132		17
Present Value of Lease Liabilities	$	248	$	57

	Successor						Predecessor
				Period From			Period From
				12/14/2019			1/1/2019
	Year Ended			through			through
(Dollars in millions except years and percentages)	12/31/2020			12/31/2019			12/13/2019
Other Supplemental Information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	101		$	5		$	131
Operating cash outflows from finance leases	$	5		$	—		$	4
Financing cash outflows from finance leases	$	9		$	1		$	8
ROU assets obtained in exchange of new operating lease liabilities	$	37		$	2		$	59
ROU assets obtained in exchange of new finance lease liabilities	$	4		$	—		$	6
Loss on sale leaseback transactions (short-term) (a)	$	—		$	—		$	34
	December 31, 2020			December 31, 2019
Weighted-average remaining lease term (years)
Operating leases	8.1			7.8
Finance leases	5.9			6.7
Weighted-average discount rate (percentages)
Operating leases	9.6		%	9.2		%
Finance leases	9.1		%	9.1		%

(a) Included in “Impairments and Other Charges” in our Consolidated Statements of Operations and “Other Assets and Liabilities, Net” in our Consolidated Statements of Cash Flows.

Leases

We lease certain facilities, land, vehicles, and equipment. Leases with an initial term of 12 months or less (“short-term leases”) are not recorded on the balance sheet (including short-term sale leaseback transactions); we recognize lease expense for these leases on a straight-line basis over the lease term.

We have data center lease agreements with lease and non-lease components which are accounted for separately, while for the remainder of our agreements we have elected the practical expedient to account for lease and non-lease components as a single lease component. For certain equipment leases, such as copiers and vehicles, we account for the leases under a portfolio method. Operating lease payments include related options to extend or terminate lease terms that are reasonably certain of being exercised.

The unmanned equipment that we lease to customers under operating leases consists primarily of drilling rental tools and artificial lift pumping equipment. These equipment rental revenues are generally provided based on call-out work orders that include fixed per unit prices and are derived from short-term contracts. See “Note 1 – Summary of Significant Accounting Policies” and “Note 23 – Revenues” for additional details on our equipment rental revenues.

	Successor				Predecessor
			Period From		Period From
	Year		12/14/2019		1/1/2019
	Ended		through		through
(Dollars in millions)	12/31/2020		12/31/2019		12/13/2019
Lease Expense Components:
Operating Lease Expense	$	76	$	5	$	109
Short-term and Variable Lease Expense	63		5		91
Subtotal of Operating Lease Expense	$	139	$	10	$	200
Finance Lease Expense: Amortization of ROU Assets and Interest on Lease Liabilities	15		1		11
Sublease Income	(6)		(1)		(6)
Total Lease Expense	$	148	$	10	$	205

Lease expense incurred under operating leases was $187 million for the Predecessor year ended December 31, 2018.

We are committed under various operating lease agreements primarily related to office space and equipment. Generally, these leases include renewal provisions and rental payments, which may be adjusted for taxes, insurance and maintenance related to the property. Future minimum commitments under operating and finance leases are as follows:

	Operating		Finance
(Dollars in millions)	Leases		Leases
Maturity of Lease Liabilities as of December 31, 2020:
2021	$	91	$	14
2022	69		12
2023	39		12
2024	28		11
2025	22		11
After 2025	131		14
Total Lease Payments	380		74
Less: Interest	132		17
Present Value of Lease Liabilities	$	248	$	57

	Successor						Predecessor
				Period From			Period From
				12/14/2019			1/1/2019
	Year Ended			through			through
(Dollars in millions except years and percentages)	12/31/2020			12/31/2019			12/13/2019
Other Supplemental Information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	101		$	5		$	131
Operating cash outflows from finance leases	$	5		$	—		$	4
Financing cash outflows from finance leases	$	9		$	1		$	8
ROU assets obtained in exchange of new operating lease liabilities	$	37		$	2		$	59
ROU assets obtained in exchange of new finance lease liabilities	$	4		$	—		$	6
Loss on sale leaseback transactions (short-term) (a)	$	—		$	—		$	34
	December 31, 2020			December 31, 2019
Weighted-average remaining lease term (years)
Operating leases	8.1			7.8
Finance leases	5.9			6.7
Weighted-average discount rate (percentages)
Operating leases	9.6		%	9.2		%
Finance leases	9.1		%	9.1		%

(a) Included in “Impairments and Other Charges” in our Consolidated Statements of Operations and “Other Assets and Liabilities, Net” in our Consolidated Statements of Cash Flows.