Weatherford Reports First Quarter Results

GENEVA, April 20 /PRNewswire-FirstCall/ -- Weatherford International Ltd. (NYSE: WFT) today reported first quarter 2010 income of $41 million, or $0.06 per diluted share, excluding an after tax loss of $0.11 per diluted share.  The excluded after tax loss was comprised of a $40 million charge related to the devaluation of the Venezuelan Bolivar, a $38 million charge related to the company’s supplemental executive retirement plan that was frozen on March 31, 2010 and severance and investigation costs.  Included in the $0.06 result were $15 million of non-cash charges related to write-offs at a less-than-majority owned subsidiary and a fair value adjustment to the put option issued in connection with the TNK-BP acquisition. First quarter diluted earnings per share reflect a decrease of 78 percent over the first quarter of 2009 diluted earnings per share of $0.27, before severance and investigation costs.  

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First quarter revenues were $2,338 million, or four percent higher than the same period last year, against a backdrop of a six percent increase in global rig count.  International revenues were up two percent against a three percent increase in international rig count compared to the first quarter of 2009.  Comparing the same periods, North America revenue was up six percent against a seven percent increase in rig count.  

Sequentially, the company’s first quarter diluted earnings per share, before charges, were $0.04 higher than the fourth quarter of 2009 diluted earnings per share of $0.02, before severance and investigation costs.  

North America

Revenues for the quarter were $891 million, which is a six percent increase over the same quarter in the prior year.  Sequentially, revenues were up 21 percent.  Almost all product lines showed sequential growth.  North America revenues are 25% below their prior peak in the third quarter of 2008.  Average rig count is down the same amount over the same period.

Operating income was $112 million, which is down $11 million compared to the same quarter in the prior year and up $71 million sequentially.  The current quarter’s margins improved 690 basis points to 12.6%.  

Middle East/North Africa/Asia

First quarter revenues of $565 million were three percent lower than the first quarter of 2009 and five percent lower than the prior quarter.  On a sequential basis, strong performances in Iraq and Egypt were offset by weather related weakness in China and Australia as well as a sluggish environment in Algeria due to political factors.

The current quarter’s operating income of $83 million decreased 38 percent as compared to the same quarter in the prior year and was flat compared to the prior quarter.

Latin America

First quarter revenues of $428 million were nine percent lower than the first quarter of 2009 and 31 percent lower than the prior quarter.  Mexico was the largest contributor to the sequential decline in revenue due to a decrease in volumes of project-based work.  Venezuelan activity also dropped off.

The current quarter’s operating income of $31 million declined 66 percent as compared to the same quarter in the prior year and declined 37 percent compared to the prior quarter.  

Europe/West Africa/FSU

First quarter revenues of $455 million were 23 percent higher than the first quarter of 2009 and five percent lower than the prior quarter.  The year-over-year increase was driven by our acquisition of TNK-BP’s oilfield service business in the third quarter of 2009.  Severe weather conditions in Russia’s Western Siberian fields was the largest contributor to the sequential decline in revenues.  

The current quarter’s operating income of $31 million declined 59 percent as compared to the same quarter in the prior year and decreased 28 percent sequentially.  Hampering profitability were $15 million of non-cash charges related to write-offs at a less-than-majority owned subsidiary and a fair value adjustment to the put option issued in connection with the TNK-BP acquisition.

Reclassifications and Non-GAAP

Non-GAAP performance measures and corresponding reconciliations to GAAP financial measures have been provided for meaningful comparisons between current results and results in prior operating periods.  

Conference Call

The company will host a conference call with financial analysts to discuss the 2010 first quarter results on April 20, 2010 at 8:00 a.m. (CDT).  The company invites investors to listen to a play back of the conference call at the company’s website, http://www.weatherford.com in the “investor relations” section.  

Weatherford is a Swiss-based, multi-national oilfield service company.  It is one of the largest global providers of innovative mechanical solutions, technology and services for the drilling and production sectors of the oil and gas industry. Weatherford operates in over 100 countries and employs over 52,000 people worldwide.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 concerning, among other things, Weatherford’s prospects for its operations which are subject to certain risks, uncertainties and assumptions.  These risks and uncertainties, which are more fully described in Weatherford International Ltd.’s reports and registration statements filed with the SEC, include the impact of oil and natural gas prices and worldwide economic conditions on drilling activity, the outcome of pending government investigations, the demand for and pricing of Weatherford’s products and services, domestic and international economic and regulatory conditions and changes in tax and other laws affecting our business.  Should one or more of these risks or uncertainties materialize, or should the assumptions prove incorrect, actual results may vary materially from those currently anticipated.

We report our financial results in accordance with generally accepted accounting principles (GAAP).  However, Weatherford's management believes that certain non-GAAP performance measures and ratios may provide users of this financial information additional meaningful comparisons between current results and results in prior operating periods.  One such non-GAAP financial measure we may present from time to time is operating income or income from continuing operations excluding certain charges or amounts.  This adjusted income amount is not a measure of financial performance under GAAP.  Accordingly, it should not be considered as a substitute for operating income, net income or other income data prepared in accordance with GAAP.  See the table below for supplemental financial data and corresponding reconciliations to GAAP financial measures for the three months ended March 31, 2010, December 31, 2009, and March 31, 2009.  Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with GAAP.

SOURCE Weatherford International Ltd.