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Weatherford Reports First Quarter 2013 Results

May 2, 2013

Earnings per Share of $0.15

GENEVA, Switzerland, May 2, 2013 /PRNewswire/ — Weatherford International Ltd. (NYSE / Euronext Paris / SIX: WFT) today reported first quarter 2013 revenues of $3,837 million with net income of $117 million, or $0.15 per diluted share, excluding after-tax losses of $95 million. On a GAAP basis, our net income for the first quarter of 2013 was $22 million, or $0.03 per diluted share. The excluded after-tax losses included:

  • $61 million of foreign exchange losses recognized upon the devaluation of the Venezuelan bolivar;
  • $18 million in professional fees associated with our income tax remediation efforts;
  • $8 million associated with legacy lump sum contracts in Iraq; and
  • $8 million in severance, exit and other charges.

(Logo: http://photos.prnewswire.com/prnh/19990308/WEATHERFORDLOGO)

The Non-GAAP effective tax rate for the quarter was 28%.

First quarter revenues of $3,837 million were seven percent higher than the same period last year and down five percent sequentially. International revenues of $2,145 million were up 17 percent over the same period in 2012 and down ten percent sequentially. North America revenue of $1,692 million was up one percent sequentially, and down four percent versus the same quarter of 2012.

Segment operating income was $429 million on a GAAP basis. Adjusted for excluded items, segment operating income of $432 million was down eight percent sequentially, and down 23 percent from the same quarter of 2012. On an adjusted basis, corporate expenses were essentially flat compared to the previous quarter.

Consistent with previously published views, the company expects the second half of 2013 to show modest growth in North America revenues and operating income. Latin America will maintain a steady improvement throughout the year. The outlook for the Eastern Hemisphere remains positive with continued expansion in Europe, Sub-Sahara Africa and Russia, with continued recovery in the Middle East/North Africa and Asia Pacific Region.

The Company maintains its estimate of an annual effective tax rate for 2013 of 34%.

North America
North America revenues for the quarter were $1,692 million, a four percent decrease over the same quarter in the prior year and up one percent sequentially. The quarter’s operating income was $224 million, down $134 million, or 37 percent from the same quarter in the prior year and down one percent, sequentially. This result is consistent with the decline in US land rig count relative to the first quarter of 2012 and the continued oversupply of hydraulic fracturing capacity. In addition, the bulk sale of our US guar inventory held at market value reduced North America margins.

Middle East/North Africa/Asia Pacific
First quarter revenues of $785 million were up $190 million, or 32 percent higher than the first quarter of 2012, and $66 million, or eight percent lower sequentially. The sequential decline is typical of seasonal effects in Asia. The current quarter’s operating income of $45 million decreased $8 million, or 15 percent from the same quarter in the prior year, and declined 22 percent sequentially.

Europe/Sub-Sahara Africa/Russia
First quarter revenues of $633 million were eleven percent higher than the first quarter of 2012 and down five percent from the prior quarter Sequentially, the decline is attributable to normal winter seasonality, and its first quarter impact on the North Sea and Russia. The current quarter’s operating income of $65 million was essentially flat when compared to the same quarter in the prior year, and was up $6 million, or 10 percent from the prior quarter.

Latin America
First quarter revenues of $727 million were up $56 million or eight percent compared to the first quarter of 2012, and down $129 million, or 15 percent sequentially. The current quarter’s operating income of $98 million increased 18 percent compared to the same quarter in the prior year, and decreased 22 percent from the prior quarter.

Liquidity and Net Debt
Net debt increased $308 million sequentially, primarily as a result of the timing of interest payments associated with our senior notes as well as an increase in working capital of $67 million and certain prepayment items. Driving the change in working capital, days sales outstanding increased to 90 days and days sales in inventory increased to 88 days.

Non-GAAP Performance Measures
Non-GAAP performance measures and corresponding reconciliations to GAAP financial measures have been provided to offer 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 quarterly results on May 3, 2013 at 8:30 a.m. eastern daylight saving time, 7:30 a.m. central daylight saving time. The company invites investors to listen to the call live via company’s website, www.weatherford.com in the Investor Relations section. A recording of the conference call and transcript of the call will be available on that section of the website shortly after the call ends.

Weatherford is a Swiss-based, multinational oilfield service company. It is one of the largest global providers of technology and services for the oil and gas industry. Weatherford operates in over 100 countries and employs over 70,000 people worldwide.

    Contacts: John H. Briscoe                     +1.713.836.4610

               Senior Vice President and Chief
               Financial Officer

              Karen David-Green                   +1.713.836.7430

              Vice President - Investor Relations

Forward-Looking Statements
This press release and the documents referenced herein contain, and the conference call announced in this release may include, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This includes statements related to future levels of earnings, revenue, expenses, margins, capital expenditures, changes in working capital, cash flows, tax expense, effective tax rates and net income, as well as the prospects for the oilfield service business generally and our business in particular, as well as statements regarding timing or content of the financial information that will be filed with the SEC regarding the current period. Forward-looking statements also include any statements about the resolution or potential future resolution of our ongoing remediation of our material weaknesses in internal control over financial reporting for income taxes and our assessment of the degree to which historical remediation efforts have been successful to date. It is inherently difficult to make projections or other forward-looking statements in a cyclical industry and given the current macroeconomic uncertainty. Such statements are based upon the current beliefs of Weatherford’s management, and are subject to significant risks, assumptions and uncertainties. These include the company’s inability to design or improve internal controls to address identified issues; the impact upon operations of legal compliance matters or internal controls review, improvement and remediation, including the detection of wrongdoing, improper activities or circumvention of internal controls; difficulties in controlling expenses, including costs of legal compliance matters or internal controls review, improvement and remediation; impact of changes in management or staff levels, the effect of global political, economic and market conditions on the company’s projected results; the possibility that the company may be unable to recognize expected revenues from current and future contracts; the effect of currency fluctuations on the company’s business; the company’s ability to manage its workforce to control costs; the cost and availability of raw materials, the company’s ability to manage its supply chain and business processes; the company’s ability to commercialize new technology; whether the company can realize expected benefits from its redomestication of its former Bermuda parent company; the company’s ability to realize expected benefits from its acquisitions and dispositions; the effect of a downturn in its industry on the company’s carrying value of its goodwill; the effect of weather conditions on the company’s operations; the impact of oil and natural gas prices and worldwide economic conditions on drilling activity; the effect of turmoil in the credit markets on the company’s ability to manage risk with interest rate and foreign exchange swaps; the outcome of pending government investigations, including the Securities and Exchange Commission’s investigation of the circumstances surrounding the company’s material weakness in its internal control over financial reporting of income taxes; the outcome of ongoing litigation, including shareholder litigation related to the company’s material weakness in its internal control over financial reporting of income taxes and its restatement of historical financial statements; the future level of crude oil and natural gas prices; demand for our products and services; levels of pricing for our products and services; utilization rates of our equipment; the effectiveness of our supply chain; weather-related disruptions and other operational and non-operational risks that are detailed in our most recent Form 10-K and other filings with the U.S. Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or underlying assumptions prove incorrect, actual results may vary materially from those indicated in our forward-looking statements. Specifically, statements regarding the current period assume that there will be no subsequent events or other adverse developments after the date of this press release that cause our financial statements for the current period, when filed with the SEC, to vary materially from the amounts herein. We undertake no obligation to correct or update any forward-looking statement, whether as a result of new information, future events, or otherwise, except to the extent required under federal securities laws.

                                                        Weatherford International Ltd.

                                               Consolidated Condensed Statements of Operations

                                                                 (Unaudited)

                                                                (In Millions)

                                                                          Three Months Ended
                                                                          ------------------

                                                                                       3/31/2013  3/31/2012
                                                                                       ---------  ---------

    Net Revenues:

             North America                                                                $1,692     $1,754

             Middle East/North Africa/Asia                                                   785        595

             Europe/SSA/Russia                                                               633        571

             Latin America                                                                   727        671

                                                                                           3,837      3,591
                                                                                           -----      -----

    Operating Income (Expense):

             North America                                                                   224        358

             Middle East/North Africa/Asia                                                    45         53

             Europe/SSA/Russia                                                                65         66

             Latin America                                                                    98         83

             Research and Development                                                        (67)       (62)

             Corporate Expenses                                                              (48)       (50)

             Other Items                                                                     (38)       (78)

                                                                                             279        370

    Other Income (Expense):

             Interest Expense, Net                                                          (131)      (112)

             Devaluation of Venezuelan Bolivar                                              (100)         -

             Other, Net                                                                      (13)       (18)

    Income (Loss) Before Income Taxes                                                         35        240

    Benefit (Provision) for Income Taxes:

             Provision for Operations                                                        (48)      (116)

             Adjustments to Provision                                                         43          6

                                                                                              (5)      (110)

    Net Income (Loss)                                                                         30        130

    Net Income Attributable to Noncontrolling
     Interests                                                                                (8)        (7)

    Net Income (Loss) Attributable to Weatherford                                            $22       $123
                                                                                             ===       ====

    Earnings Per Share Attributable to Weatherford

             Basic                                                                         $0.03      $0.16

             Diluted                                                                       $0.03      $0.16

    Weighted Average Shares Outstanding:

             Basic                                                                           769        760

             Diluted                                                                         773        766

                                                                                  Weatherford International Ltd.

                                                                           Selected Statements of Operations Information

                                                                                            (Unaudited)

                                                                                           (In Millions)

                                                                  Three Months Ended
                                                                  ------------------

                                                           3/31/2013                                12/31/2012           9/30/2012  6/30/2012  3/31/2012
                                                           ---------                                ----------           ---------  ---------  ---------

    Net Revenues:

             North America                                    $1,692                                    $1,682              $1,725     $1,663     $1,754

             Middle East/North Africa/Asia                       785                                       851                 700        649        595

             Europe/SSA/Russia                                   633                                       669                 626        653        571

             Latin America                                       727                                       856                 768        782        671

                                                              $3,837                                    $4,058              $3,819     $3,747     $3,591
                                                              ======                                    ======              ======     ======     ======

                                                                  Three Months Ended
                                                                  ------------------

                                                           3/31/2013                                12/31/2012           9/30/2012  6/30/2012  3/31/2012
                                                           ---------                                ----------           ---------  ---------  ---------

    Operating Income (Expense):

             North America                                      $224                                      $226                $297       $226       $358

             Middle East/North Africa/Asia                        45                                        58                  36         24         53

             Europe/SSA/Russia                                    65                                        59                  88        102         66

             Latin America                                        98                                       125                  97         90         83

             Research and Development                            (67)                                      (63)                (68)       (64)       (62)

             Corporate Expenses                                  (48)                                      (49)                (48)       (49)       (50)

             Goodwill and Equity Investment Impairment             -                                         -                   -       (793)         -

             Sanctioned Country Loss Contingency                   -                                         -                   -       (100)         -

             Other Items                                         (38)                                     (111)                (87)       (68)       (78)

                                                                $279                                      $245                $315      $(632)      $370
                                                                ====                                      ====                ====      =====       ====

                                                                  Three Months Ended
                                                                  ------------------

                                                           3/31/2013                                12/31/2012           9/30/2012  6/30/2012  3/31/2012
                                                           ---------                                ----------           ---------  ---------  ---------

    Product Line Revenues:

             Formation Evaluation and Well Construction(1)    $2,273                                    $2,348              $2,128     $2,058     $2,034

             Completion and Production(2)                      1,564                                     1,710               1,691      1,689      1,557

                                                              $3,837                                    $4,058              $3,819     $3,747     $3,591
                                                              ======                                    ======              ======     ======     ======

                                                                  Three Months Ended
                                                                  ------------------

                                                           3/31/2013                                12/31/2012           9/30/2012  6/30/2012  3/31/2012
                                                           ---------                                ----------           ---------  ---------  ---------

    Depreciation and Amortization:

             North America                                      $108                                      $108                $108       $101        $95

             Middle East/North Africa/Asia                        93                                        94                  90         85         83

             Europe/SSA/Russia                                    71                                        71                  63         60         61

             Latin America                                        68                                        63                  61         59         55

             Research and Development and Corporate                6                                         7                   7          6          5

                                                                $346                                      $343                $329       $311       $299
                                                                ====                                      ====                ====       ====       ====
    (1)            Formation Evaluation and Well
                   Construction includes Drilling
                   Services, Well Construction,
                   Integrated Drilling, Wireline
                   and Evaluation Services,
                   Drilling Tools and Fishing and
                   Re-entry.

    (2)            Completion and Production
                   includes Artificial Lift
                   Systems, Stimulation and
                   Chemicals, Completion Systems
                   and Pipeline and Specialty
                   Services

    We report our financial results in
     accordance with generally accepted
     accounting principles (GAAP).
     However, Weatherford's management
     believes that certain non-GAAP
     financial measures and ratios (as
     defined under the SEC's Regulation
     G) may provide users of this
     financial information additional
     meaningful comparisons between
     current results and results in
     prior periods.   The non-GAAP
     financial measures we may present
     from time to time include: (1)
     operating income or income from
     continuing operations excluding
     certain charges or amounts, (2)
     the provision for income taxes
     excluding discrete items and (3)
     the resulting non-GAAP net income
     and per share amounts.  These
     adjusted amounts are not measures
     of financial performance under
     GAAP.  Accordingly, these amounts
     should not be considered as a
     substitute for operating income,
     provision for income taxes, net
     income or other data prepared and
     reported 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, 2013,
     December 31, 2012, and March 31,
     2012.  Non-GAAP financial
     measures should be viewed in
     addition to, and not as an
     alternative to, the Company's
     reported results prepared in
     accordance with GAAP.

                                                                                           Weatherford International Ltd.

                                                                                Reconciliation of GAAP to Non-GAAP Financial Measures

                                                                                                     (Unaudited)

                                                                                       (In Millions, Except Per Share Amounts)

                                                                                        Three Months Ended
                                                                                      ------------------

                                                                                              3/31/2013                                    12/31/2012                                   3/31/2012
                                                                                              ---------                                    ----------                                   ---------

    Operating Income:

                             GAAP Operating
                             Income                                                                $279                                          $245                                        $370

                             Tax Remediation and Restatement
                             Expenses                                                                21                                            50                                          15

                            Legacy Contracts (a)                                                      3                                            30                                          31

                            Other Adjustments                                                        14                                            31                                          32

                             Non-GAAP
                             Operating Income                                                      $317                                          $356                                        $448

    Income (Loss) Before Income Taxes:

                             GAAP Income
                             (Loss) Before
                             Income Taxes                                                           $35                                           $89                                        $240

                             Devaluation of Venezuelan
                             Bolivar                                                                100                                             -                                           -

                             Tax Remediation and Restatement
                             Expenses                                                                21                                            50                                          15

                            Legacy Contracts                                                          3                                            30                                          31

                            Other Adjustments                                                        14                                            31                                          29

                             Non-GAAP Income
                             (Loss) Before
                             Income Taxes                                                          $173                                          $200                                        $315

    Benefit (Provision) for Income Taxes:

                             GAAP Benefit
                             (Provision) for
                             Income Taxes                                                           $(5)                                        $(203)                                      $(110)

                             Devaluation of Venezuelan
                             Bolivar                                                                (39)                                            -                                           -

                             Tax Remediation and Restatement
                             Expenses                                                                (3)                                           (7)                                         (3)

                            Legacy Contracts                                                          5                                            34                                           -

                            Other Adjustments                                                        (6)                                           (8)                                         (3)

                             Non-GAAP Benefit
                             (Provision) for
                             Income Taxes                                                          $(48)                                        $(184)                                      $(116)

    Net Income (Loss) Attributable to Weatherford:

                             GAAP Net Income
                             (Loss)                                                                 $22                                         $(122)                                       $123

                            Total Charges, net of tax                                                95       (b)                                 130       (c)                                69       (d)

                             Non-GAAP Net
                             Income                                                                $117                                            $8                                        $192

    Diluted Earnings (Loss) Per Share Attributable to Weatherford:

                             GAAP Diluted
                             Earnings (Loss)
                             per Share                                                            $0.03                                        $(0.16)                                      $0.16

                            Total Charges, net of tax                                              0.12                                          0.17                                        0.09
                                                                                                   ----                                          ----                                        ----

                             Non-GAAP Diluted
                             Earnings per
                             Share                                                                $0.15                                         $0.01                                       $0.25

                             GAAP Effective
                             Tax Rate (e)                                                            14%                                          228%                                         46%

                             Annual Effective
                             Tax Rate (f)                                                            28%                                           92%                                         37%

    Note (a):  The revenues associated
     with the legacy lump sum contracts
     in Iraq were $166 million, $177
     million and $51 million in each of
     the three months ended March 31,
     2013, December 31, 2012, and March
     31, 2012, respectively.

    Note (b):  Non-GAAP adjustments
     are comprised of (i) a charge for
     the devaluation of the Venezuelan
     Bolivar of $61 million, (ii) tax
     restatement and remediation
     expenses of $18 million, (iii) $8
     million in operating losses and
     tax expense related to legacy lump
     sum contracts in Iraq, (iv) $8
     million in other adjustments
     consisting of severance and other
     charges including $3 million in
     investigation related expenses.

    Note (c):  Non-GAAP adjustments
     are comprised of (i) tax
     restatement and remediation
     expenses of $43 million, (ii) $64
     million in operating losses and
     tax expense related to legacy lump
     sum contracts in Iraq, (iii) $23
     million in other adjustments
     consisting of severance and other
     charges including $7 million in
     investigation related expenses.

    Note (d):  Non-GAAP adjustments
     are comfprised of (i) tax
     restatement and remediation
     expenses of $15 million, (ii) $31
     million in operating losses and
     tax expense related to legacy lump
     sum contracts in Iraq, (iii) $29
     million in other adjustments
     consisting of severance and other
     charges including $2 million in
     investigation related expenses.

    Note (e):  GAAP Effective Tax Rate
     is GAAP provision for income taxes
     divided by GAAP income before
     income taxes.

    Note (f):  Annual Effective Tax
     Rate is the Non-GAAP provision
     for income taxes divided by Non-
     GAAP income before income taxes.

                                                                                                        Weatherford International Ltd.

                                                                                                          Selected Balance Sheet Data

                                                                                                                  (Unaudited)

                                                                                                                 (In Millions)

                                                                        3/31/2013                              12/31/2012                            9/30/2012                            6/30/2012                            3/31/2012
                                                                        ---------                              ----------                            ---------                            ---------                            ---------

    Assets:

                       Cash and
                       Cash
                       Equivalents                                           $286                                    $300                                 $365                                 $381                                 $339

                       Accounts
                       Receivable,
                       Net                                                  3,850                                   3,885                                3,911                                3,608                                3,358

                       Inventories,
                       Net                                                  3,744                                   3,675                                3,676                                3,399                                3,301

                       Property,
                       Plant and
                       Equipment,
                       Net                                                  8,299                                   8,299                                8,122                                7,733                                7,591

                       Goodwill and
                       Intangibles,
                       Net                                                  4,485                                   4,637                                4,653                                4,581                                5,152

                       Equity
                       Investments                                            660                                     646                                  642                                  629                                  634

    Liabilities:

                       Accounts
                       Payable                                              2,191                                   2,108                                2,023                                1,635                                1,684

                       Short-term
                       Borrowings
                       and Current
                       Portion

                      of Long-term Debt                                     1,896                                   1,585                                1,606                                1,263                                1,902

                       Long-term
                       Debt                                                 7,032                                   7,049                                7,300                                7,311                                5,989

                                                      Weatherford International Ltd.

                                                                 Net Debt

                                                                (Unaudited)

                                                               (In Millions)

    Change in Net Debt for the Three Months Ended 3/31/2013:

                                           Net Debt at
                                            12/31/2012                              $(8,334)

                     Operating Income                                                   279

                     Depreciation and Amortization                                      346

                     Other Items                                                         38

                     Capital Expenditures                                              (400)

                     Increase in Working Capital                                        (67)

                     Income Taxes Paid                                                 (124)

                     Interest Paid                                                     (183)

                      Acquisitions and Divestitures of
                      Assets and Businesses, Net                                         81

                     Other                                                             (278)
                                                                                       ----

                                           Net Debt at
                                             3/31/2013                              $(8,642)

                      Components of
                      Net Debt                                                    3/31/2013                                12/31/2012

                     Cash                                                              $286                                      $300

                      Short-term Borrowings and
                      Current Portion of Long-term
                      Debt                                                           (1,896)                                   (1,585)

                     Long-term Debt                                                  (7,032)                                   (7,049)
                                                                                     ------                                    ------

                     Net Debt                                                       $(8,642)                                  $(8,334)
                                                                                    =======                                   =======
    "Net Debt" is debt less cash.
     Management believes that Net Debt
     provides useful information
     regarding the level of Weatherford
     indebtedness by reflecting cash that
     could be used to repay debt.

    Working capital is defined as
     accounts receivable plus inventory
     less accounts payable.

SOURCE Weatherford International Ltd.


Source: PR Newswire