Weatherford making strides in comeback from downturn

By Patrick C. Miller | May 07, 2018

Improvements in revenue growth related to production increases and well construction throughout parts of the U.S. and Latin America are assisting Weatherford International’s efforts to recover from the effects of the oil price downturn.

Reporting on the first quarter of 2018, Weatherford CEO Mark McCollum said the company is seeing positive results from reduced core costs, lowered depreciation and an improved market environment. Increased accountability, efficiency and process discipline has occurred across the entire company, he added. Weatherford reported a net loss of $245 million (25 cents per share) for the first quarter of 2018.

"As we continue on our transformational path, our results for the first quarter of 2018 reflect our focus on planning and executing tangible actions to improve our position as a strong, viable and innovative organization,” McCollum said, noting that on a year-over-year basis, Weatherford’s operating income, margins and adjusted EBITDA improved substantially.

Among the quarterly highlights covered by Weatherford were a 145 percent year-over-year increase in operating income; the successful extension of 2019 and 2020 debt maturities through closing a private offering of $600 million in senior notes; launching two planned divestures, in addition to making progress on its land drilling rigs divestiture; an estimated recurring benefit of $108 million in annualized cost savings; and $41 million in one-time benefits.

Revenue in the first quarter of 2018 was $1.42 billion, a decrease of 4 percent from revenue from the fourth quarter of 2017 and 3 percent higher than the same quarter a year ago. The sequential revenue decrease was due to non-repeating year-end product sales as well as seasonal declines in the North Sea and Russia.

Weatherford said the year-over-year increase was primarily due to activity increases in the U.S., Argentina and Mexico in the Western Hemisphere and Kuwait, Iraq, Russia and Saudi Arabia in the Eastern Hemisphere This was partially offset by a decrease in Venezuela as a result of a change in accounting for revenue to cash basis and depressed offshore markets in the North Sea, West Africa and Asia.

In the U.S., Weatherford was awarded a one-year contract for servicing and inspecting reciprocating-rod-lift surface equipment across more than 400 wells in the Bakken shale. An operator in the Eagle Ford shale deployed Weatherford logging-while-drilling services to identify wellbore fractures while drilling, resulting in cost savings of about $300,000 per well, according to the company.

"The goals we have set forth for 2018 and 2019 are realistic and achievable,” McCollum said. “We are on track and, in the first quarter, have already achieved 10 percent of our annualized recurring benefit target. We have the right people, technologies and processes to be successful, and by executing on the detailed action plans we have developed over the past few months, we will generate improved returns and create significant value for our shareholders."