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2015-08-03 17:25:00

WEATHERFORD NET LOSS $ 607 MLN

WEATHERFORD NET LOSS $ 607 MLN

 

Weatherford International plc

Condensed Consolidated Statements of Operations

(Unaudited)

(In Millions, Except Per Share Amounts)

                 
   

Three Months Ended

 

Six Months Ended

   

6/30/2015

 

6/30/2014

 

6/30/2015

 

6/30/2014

Net Revenues:

               

North America

 

$

808

   

$

1,659

   

$

1,971

   

$

3,269

 

Middle East/North Africa/Asia

 

516

   

579

   

1,049

   

1,198

 

Europe/SSA/Russia

 

418

   

561

   

835

   

1,077

 

Latin America

 

463

   

518

   

949

   

1,027

 

  Subtotal

 

2,205

   

3,317

   

4,804

   

6,571

 

Land Drilling Rigs

 

185

   

394

   

380

   

736

 

   Total Net Revenues

 

2,390

   

3,711

   

5,184

   

7,307

 
                 

Operating Income (Expense):

               

North America

 

(92)

   

254

   

(102)

   

457

 

Middle East/North Africa/Asia

 

55

   

75

   

124

   

128

 

Europe/SSA/Russia

 

65

   

107

   

136

   

185

 

Latin America

 

85

   

77

   

183

   

169

 

  Subtotal

 

113

   

513

   

341

   

939

 

Land Drilling Rigs

 

4

   

6

   

14

   

(18)

 

Research and Development

 

(59)

   

(75)

   

(123)

   

(144)

 

Corporate Expenses

 

(46)

   

(45)

   

(102)

   

(92)

 

Loss on Sale of Businesses and Investments, Net

 

(5)

   

   

(2)

   

 

Impairments and Other Charges

 

(471)

   

(374)

   

(542)

   

(530)

 

  Total Operating Income (Loss)

 

(464)

   

25

   

(414)

   

155

 
                 

Other (Expense):

               

Interest Expense, Net

 

(117)

   

(128)

   

(237)

   

(254)

 

Other, Net

 

(18)

   

(19)

   

(29)

   

(28)

 

Foreign Exchange Related Charges

 

(16)

   

   

(42)

   

 

Net Loss Before Income Taxes

 

(615)

   

(122)

   

(722)

   

(127)

 
                 

Benefit (Provision) for Income Taxes

 

132

   

(11)

   

132

   

(38)

 
                 

Net Loss

 

(483)

   

(133)

   

(590)

   

(165)

 

Net Income Attributable to Noncontrolling Interests

 

6

   

12

   

17

   

21

 

Net Loss Attributable to Weatherford

 

$

(489)

   

$

(145)

   

$

(607)

   

$

(186)

 
                 

Loss Per Share Attributable to Weatherford:

               

Basic & Diluted

 

$

(0.63)

   

$

(0.19)

   

$

(0.78)

   

$

(0.24)

 
                 

Weighted Average Shares Outstanding:

               

Basic & Diluted

 

778

   

777

   

778

   

776

 

 

Weatherford International plc

Selected Statements of Operations Information

(Unaudited)

(In Millions)

 

Three Months Ended

 

6/30/2015

 

3/31/2015

 

12/31/2014

 

9/30/2014

 

6/30/2014

Net Revenues:

                 

North America

$

808

   

$

1,163

   

$

1,769

   

$

1,814

   

$

1,659

 

Middle East/North Africa/Asia

516

   

533

   

575

   

633

   

579

 

Europe/SSA/Russia

418

   

417

   

497

   

555

   

561

 

Latin America

463

   

486

   

664

   

591

   

518

 

  Subtotal

2,205

   

2,599

   

3,505

   

3,593

   

3,317

 

Land Drilling Rigs

185

   

195

   

222

   

284

   

394

 

  Total Net Revenues

$

2,390

   

$

2,794

   

$

3,727

   

$

3,877

   

$

3,711

 
                   
 

Three Months Ended

 

6/30/2015

 

3/31/2015

 

12/31/2014

 

9/30/2014

 

6/30/2014

Operating Income (Loss):

                 

North America

$

(92)

   

$

(10)

   

$

286

   

$

294

   

$

254

 

Middle East/North Africa/Asia

55

   

69

   

60

   

79

   

75

 

Europe/SSA/Russia

65

   

71

   

95

   

119

   

107

 

Latin America

85

   

98

   

113

   

97

   

77

 

  Subtotal

113

   

228

   

554

   

589

   

513

 

Land Drilling Rigs

4

   

10

   

(2)

   

9

   

6

 

Research and Development

(59)

   

(64)

   

(74)

   

(72)

   

(75)

 

Corporate Expenses

(46)

   

(56)

   

(41)

   

(45)

   

(45)

 

Gain (Loss) on Sale of Businesses and Investments, Net

(5)

   

3

   

311

   

38

   

 

Impairments and Other Charges

(471)

   

(71)

   

(716)

   

(201)

   

(374)

 

  Total Operating Income (Loss)

$

(464)

   

$

50

   

$

32

   

$

318

   

$

25

 
                   
 

Three Months Ended

 

6/30/2015

 

3/31/2015

 

12/31/2014

 

9/30/2014

 

6/30/2014

Product Service Line Revenues:

                 

Formation Evaluation and Well Construction (a)

$

1,355

   

$

1,582

   

$

1,934

   

$

2,007

   

$

1,855

 

Completion and Production (b)

850

   

1,017

   

1,571

   

1,586

   

1,462

 

Land Drilling Rigs

185

   

195

   

222

   

284

   

394

 

  Total Product Service Line Revenues

$

2,390

   

$

2,794

   

$

3,727

   

$

3,877

   

$

3,711

 
                   
 

Three Months Ended

 

6/30/2015

 

3/31/2015

 

12/31/2014

 

9/30/2014

 

6/30/2014

Depreciation and Amortization:

                 

North America

$

97

   

$

105

   

$

108

   

$

108

   

$

107

 

Middle East/North Africa/Asia

66

   

65

   

70

   

67

   

71

 

Europe/SSA/Russia

53

   

50

   

55

   

52

   

57

 

Latin America

62

   

61

   

65

   

57

   

61

 

Land Drilling Rigs

27

   

29

   

34

   

37

   

54

 

Research and Development and Corporate

6

   

6

   

6

   

6

   

5

 

  Total Depreciation and Amortization

$

311

   

$

316

   

$

338

   

$

327

   

$

355

 
 
 

Weatherford International plc

Reconciliation of GAAP to Non-GAAP Financial Measures

(Unaudited)

(In Millions, Except Per Share Amounts)

                     
   

Three Months Ended

 

Six Months Ended

   

6/30/2015

 

3/31/2015

 

6/30/2014

 

6/30/2015

 

6/30/2014

Operating Income:

                   

GAAP Operating Income (Loss)

 

$

(464)

   

$

50

   

$

25

   

$

(414)

   

$

155

 

  Restructuring, Exited Businesses and Severance

 

72

   

41

   

86

   

113

   

170

 

  Impairments, Divestiture Related and Other Charges(a)

 

223

   

18

   

286

   

241

   

312

 

  Legacy Contracts and Other

 

69

   

9

   

2

   

78

   

48

 

  Litigation Charges

 

112

   

   

   

112

   

 

Total Non-GAAP Adjustments

 

476

   

68

   

374

   

544

   

530

 

Non-GAAP Operating Income

 

$

12

   

$

118

   

$

399

   

$

130

   

$

685

 
                     

Income (Loss) Before Income Taxes:

                   

GAAP Loss Before Income Taxes

 

$

(615)

   

$

(107)

   

$

(122)

   

$

(722)

   

$

(127)

 

  Operating Income Adjustments

 

476

   

68

   

374

   

544

   

530

 

  Foreign Exchange Related Charges

 

16

   

26

   

   

42

   

 

Non-GAAP Income (Loss) Before Income Taxes

 

$

(123)

   

$

(13)

   

$

252

   

$

(136)

   

$

403

 
                     

Provision (Benefit) for Income Taxes:

                   

GAAP Benefit (Provision) for Income Taxes

 

$

132

   

$

   

$

(11)

   

$

132

   

$

(38)

 

    Tax Effect on Non-GAAP Adjustments

 

(80)

   

(9)

   

(43)

   

(89)

   

(59)

 

Non-GAAP Benefit (Provision) for Income Taxes

 

$

52

   

$

(9)

   

$

(54)

   

$

43

   

$

(97)

 
                     

Net Income (Loss) Attributable to Weatherford:

                   

GAAP Net Loss

 

$

(489)

   

$

(118)

   

$

(145)

   

$

(607)

   

$

(186)

 

Total Charges, net of tax

 

412

   

85

   

331

   

497

   

471

 

Non-GAAP Net Income (Loss)

 

$

(77)

   

$

(33)

   

$

186

   

$

(110)

   

$

285

 
                     

Diluted Earnings (Loss) Per Share Attributable to Weatherford:

                   

GAAP Diluted Loss per Share

 

$

(0.63)

   

$

(0.15)

   

$

(0.19)

   

$

(0.78)

   

$

(0.24)

 

  Total Charges, net of tax

 

0.53

   

0.11

   

0.43

   

0.64

   

0.60

 

Non-GAAP Diluted Earnings (Loss) per Share

 

$

(0.10)

   

$

(0.04)

   

$

0.24

   

$

(0.14)

   

$

0.36

 
                     

GAAP Effective Tax Rate (b)

 

21

%

 

%

 

(10)

%

 

18

%

 

(30)

%

Non-GAAP Effective Tax Rate (c)

 

42

%

 

(73)

%

 

22

%

 

31

%

 

24

%

 
 

Weatherford International plc

Selected Balance Sheet Data

(Unaudited)

(In Millions)

                     
   

6/30/2015

 

3/31/2015

 

12/31/2014

 

9/30/2014

 

6/30/2014

Assets:

                   

Cash and Cash Equivalents

 

$

611

   

$

512

   

$

474

   

$

582

   

$

571

 

Accounts Receivable, Net

 

2,259

   

2,631

   

3,015

   

3,259

   

3,291

 

Inventories, Net

 

2,921

   

3,052

   

3,087

   

3,229

   

3,281

 

Property, Plant and Equipment, Net

 

6,694

   

6,932

   

7,123

   

7,555

   

7,677

 

Goodwill and Intangibles, Net

 

3,335

   

3,311

   

3,451

   

3,663

   

3,799

 

Equity Investments

 

81

   

101

   

106

   

266

   

262

 

Current Assets Held for Sale

 

   

   

   

538

   

1,326

 
                     

Liabilities:

                   

Accounts Payable

 

1,104

   

1,462

   

1,736

   

1,749

   

1,783

 

Short-term Borrowings and Current Portion of Long-term Debt

 

1,556

   

1,554

   

727

   

1,715

   

2,404

 

Long-term Debt

 

6,268

   

6,278

   

6,798

   

7,004

   

7,021

 

Current Liabilities Held for Sale

 

   

   

   

77

   

268

 
                               
 

Weatherford International plc

Net Debt

(Unaudited)

(In Millions)

             

Change in Net Debt for the Three Months Ended 6/30/2015:

           

Net Debt at 3/31/2015

         

$

(7,320)

 

  Operating Income

         

(464)

 

  Depreciation and Amortization

         

311

 

  Capital Expenditures

         

(187)

 

  Decrease in Working Capital

         

110

 

  Goodwill & Long-Lived Asset Impairment and Other

         

144

 

  Litigation Charges

         

112

 

  Restructuring and Other Asset Related Charges

         

122

 

  Foreign Exchange Related Charges

         

16

 

  Income Taxes Paid

         

(92)

 

  Interest Paid

         

(68)

 

  Net Change in Billing in Excess/Costs in Excess

         

76

 

  Other

         

27

 

Net Debt at 6/30/2015

         

$

(7,213)

 
             

Change in Net Debt for the Six Months Ended 6/30/2015:

           

Net Debt at 12/31/2014

         

$

(7,051)

 

  Operating Income

         

(414)

 

  Depreciation and Amortization

         

627

 

  Capital Expenditures

         

(411)

 

  Decrease in Working Capital

         

147

 

  Goodwill & Long-Lived Asset Impairment and Other

         

144

 

  Litigation Charges

         

112

 

  Restructuring and Other Asset Related Charges

         

122

 

  Foreign Exchange Related Charges

         

42

 

  Income Taxes Paid

         

(180)

 

  Interest Paid

         

(239)

 

  Net Change in Billing in Excess/Costs in Excess

         

(2)

 

  Other

         

(110)

 

Net Debt at 6/30/2015

         

$

(7,213)

 
             
             

Components of Net Debt

 

6/30/2015

 

3/31/2015

 

12/31/2014

  Cash

 

$

611

   

$

512

   

$

474

 

  Short-term Borrowings and Current Portion of Long-term Debt

 

(1,556)

   

(1,554)

   

(727)

 

  Long-term Debt

 

(6,268)

   

(6,278)

   

(6,798)

 

  Net Debt

 

$

(7,213)

   

$

(7,320)

   

$

(7,051)

 
 

Weatherford International plc (NYSE: WFT) reported a net loss before charges of $77 million ($0.10 net loss per share non-GAAP) on revenues of $2.39 billion for the second quarter of 2015. GAAP net loss for the second quarter of 2015 was $489 million, or a net loss of $0.63 per share.

Second Quarter 2015 Highlights

  • Positive free cash flow of $104 million, principally on improved working capital performance and lower capital expenditures;
  • Free cash flow improved sequentially $370 million, despite lower earnings; and 
  • Completed 97% of the reduction in force target of 10,000 employees by June 30, 2015, with expected annualized savings of $686 million. 

Bernard J. Duroc-Danner, Chairman of the Board, President and Chief Executive Officer, stated, "The second quarter was a very difficult one to navigate. Given the circumstances, I would like to highlight two positives, our revenue performance and our North American decrementals. Rig count declined 26% on a worldwide basis. By contrast, our revenue performance showed a sequential decline of 14%. The international segment was particularly strong, with a decline of only 2.7%, despite lower activity and pricing levels, suggesting that we are gradually increasing market share. North American revenue declined 30% compared to a 40% reduction in rig count and despite our disproportionately larger presence in Canada and on U.S. land. I would also focus your attention on the sequential decremental margins for North America, which at 23% were about half the level achieved in 2009. This reflects the strong and proactive cost management measures we have taken this year. 

We remain confident in our ability to generate positive free cash flow on a full year basis. By implementing focused measures and continued discipline, we generated second quarter free cash flow of $104 million, a sequential improvement of $370 million. This result was achieved despite industry headwinds and a very weak North American market, which drove negative net income for the quarter."

Second Quarter 2015 Results

Revenue for the second quarter of 2015 was $2.39 billion compared with $2.79 billion in the first quarter of 2015 and $3.71 billion in the second quarter of 2014. Second quarter revenues declined 14% sequentially and 36% from the prior year. Sequentially, North America comprised the bulk of the revenue decline with only a small decrease in revenues internationally.

Net loss on a non-GAAP basis for the second quarter of 2015 was $77 million compared to net income of $186 million in the second quarter of the prior year and a net loss of $33 million in the first quarter of 2015.

GAAP net loss for the second quarter of 2015 was $489 million, or a net loss of $0.63 per share.

After-tax charges of $412 million for the second quarter include:

  • $106 million (pre-tax $112 million), primarily related to the settlement of a lawsuit related to the restatement of our historical financial statements in previous years;
  • $159 million (pre-tax $223 million), primarily for the impairment of part of our U.S. pressure pumping asset base, true-ups related to our 2014 divestiture activity and other professional fees;
  • $62 million (pre-tax $72 million), of costs related to severance and facility closures in our 2015 cost reduction plan, including a write-off of our net assets in Yemen due to the political disruption there;
  • $69 million (pre-tax $69 million), net of legacy contract charges; and
  • $16 million (pre-tax $16 million), due to exceptional foreign exchange related charges in Angola.

Operating income margin of 4.9% for the second quarter declined 365 basis points sequentially and 909 basis points compared to the second quarter of 2014, reflecting the activity and pricing led revenue reductions.

The tax rate for the quarter (non-GAAP) was 42%, reflecting a net tax benefit on losses in North America which more than offset a normal tax charge on international earnings.

Segment Highlights

Starting last quarter, the regional results reflect the core Weatherford businesses, while the Land Drilling Rigs business results are disclosed as a separate operating segment. Prior period numbers have been reclassified to conform to the current presentation.

North America

Second quarter revenues of $808 million were down $355 million, or 30% sequentially (on an average rig count decline of 40%), and down $851 million, or 51%, over the same quarter in the prior year. Second quarter operating losses of $92 million were down $82 million sequentially and down $346 million from the same quarter in the prior year. The sequential decline in revenue is due to the continued decline in U.S. rig count, the seasonal spring break up in Canada and pricing pressure on all of our service and product offerings. Sequential decremental margins of 23% improved from the first quarter of 49% due to the impact of cost reduction efforts including the incremental headcount reductions announced last quarter that were concentrated in this region.

International Operations

Second quarter revenues of $1.4 billion were down $39 million, or 3% sequentially, and down $261 million, or 16%, over the same quarter in the prior year. Second quarter operating income of $205 million (14.7% margin) was down $33 million sequentially and by $54 million from the same quarter in the prior year.

Latin America 

Second quarter revenues of $463 million were down $23 million, or 5% sequentially, and down $55 million, or 11%, compared to the same quarter in the prior year. Second quarter operating income of $85 million (18.4% margin) was down 13% sequentially, and up 11%, compared to the same quarter in the prior year. The sequential revenue decline occurred primarily from lower activity across all product lines in Colombia. Operating income was directly impacted by the overall lower revenue in Colombia and in Well Construction.

Europe/Sub-Sahara Africa/Russia

Second quarter revenues of $418 million were up $1 million sequentially, and down $143 million, or 25%, over the same quarter in the prior year. Second quarter operating income of $65 million (15.7% margin) was down $6 million or 7% sequentially, and down 39% when compared to the same quarter in the prior year. Revenue decline from pricing pressure in Europe and Sub-Sahara Africa, was small and was offset by the seasonal recovery in Russia. Operating income was negatively affected by the project delays in Sub-Sahara Africa and remained relatively stable in Europe, while showing a gradual increase in Russia.

Middle East/North Africa/Asia Pacific

Second quarter revenues of $516 million were down $17 million, or 3% sequentially, and down $63 million, or 11%, over the same quarter in the prior year. Second quarter operating income of $55 million (10.6% margin) was down 21% sequentially and down 28% from the same quarter in the prior year. The revenue decline was attributable to lower activity from the early production facility contract in Iraq as well as from the shutdown of operations in Yemen. These declines were partially offset by increases in Kuwait and the United Arab Emirates. The slight decline in Asia Pacific revenues was due to lower customer spending in Malaysia and Indonesia, which was offset by growth in Australia and China. Operating income declined due to the lower revenue base and an unfavorable product mix, partially offset by continued cost reduction measures.

Land Drilling Rigs

Second quarter revenues of $185 million were down $10 million, or 6% sequentially, and down $209 million, or 53%, compared to the same quarter in the prior year. Second quarter operating income of $4 million (2.2% margin) was down $6 million sequentially with a 302 basis point decline and down $2 million from the same quarter in the prior year. The decline in international drilling activity negatively impacted sequential revenues particularly in Romania, Australia, and Bangladesh. Operating income as well as revenue levels decreased as rig utilization declined.

Free Cash Flow and Net Debt

Sequentially, net debt decreased by $107 million and working capital balances generated free cash of $110 million during the quarter, mainly reflecting improvements from strong customer collections. Free cash flow in the second quarter improved sequentially by $370 million, with lower working capital and capital expenditure, more than offsetting lower earnings. Free cash flow from operations generated $104 million in the second quarter and included net cash expenses of $13 million related to the legacy Zubair contract in Iraq, $39 million for severance costs paid during the quarter, and cash taxes and interest totaling $160 million. Capital expenditures of $160 million (net of lost-in-hole) in the second quarter were down sequentially by 18% and down 53% from the same quarter of the prior year, reflecting strong spending controls in place.

Outlook

Because of the continuing weak North American market conditions, we plan to further reduce our cost structure to reflect the current environment. During the second quarter, we successfully completed substantially all of the previously announced headcount reduction of 10,000. The aggregate results of these measures will help mitigate the effects of the downturn, while at the same time, take advantage of the opportunity to develop a leaner structure and a tighter organization. This target has now been revised upward to 11,000 with the increase principally in the U.S with a focus on support positions. Our procurement savings initiative continues to be on track. In addition to our headcount reductions, this quarter, we closed three of our manufacturing and service facilities. We have also closed over 60 operating facilities across North America through the first half of 2015 and plan to close 30 more by the end of the year. All the while, quality, safety and reliability in execution will remain paramount.

Going forward, we expect positive free cash flow in the third and fourth quarters driven by further reductions in working capital balances, continued discipline on capital expenditure spending, reduced severance cash payments, and improved net income. The full year forecast for capital expenditures has now been further revised downwards by $100 million to $750 million, which is 48% lower than 2014 levels.

Bernard J. Duroc-Danner, Chairman, President and Chief Executive Officer commented, "Market conditions will not improve significantly in the balance of the year. There will be modest activity increases in North America and selected international geographies but these will not be material. In this environment, we expect to grow market share internationally and benefit from better operating economics in the U.S. We expect to generate positive free cash flow from operations on a full year basis due to our cost actions, continued focus on working capital, reduced capital expenditures, and higher net income levels in the second half of the year.

Lastly, our cost reduction objectives, both cyclical and structural, are targeted globally. Based on our 2015 reduction in force actions, we now expect annualized savings of over $700 million. As we emerge gradually from this industry down cycle, we expect to operate as a much leaner, more efficient and streamlined organization."

weatherford.com

More: 

WEATHERFORD CUTS 11,000 

WEATHERFORD 10,000 LAYOFFS 

WEATHERFORD CUTS JOBS 

U.S.: 75,000 JOBS CUTTING 

РОСНЕФТЬ КУПИЛА WEATHERFORD

 

Tags: WEATHERFORD, OIL, PRICES

Chronicle:

WEATHERFORD NET LOSS $ 607 MLN
October, 20, 12:10:00

NORWAY'S PRODUCTION DOWN 171 TBD

NPD - Preliminary production figures for September 2017 show an average daily production of 1 772 000 barrels of oil, NGL and condensate, which is a decrease of 171 000 barrels per day compared to August.

WEATHERFORD NET LOSS $ 607 MLN
October, 20, 12:05:00

ЦЕНА URALS: $ $55,55881

Средняя цена на нефть Urals за период мониторинга с 15 сентября по 14 октября 2017 года составила $55,55881 за баррель, или $405,6 за тонну.

WEATHERFORD NET LOSS $ 607 MLN
October, 18, 19:10:00

OIL PRICE: ABOVE $58

Brent crude futures, the international benchmark for oil prices, were at $58.16 at 0643 GMT, up 28 cents, or 0.5 percent from their last close - and almost a third above mid-year levels. U.S. West Texas Intermediate (WTI) crude futures were at $52.03 per barrel, up 15 cents, or 0.3 percent, and almost a quarter above mid-June levels.

WEATHERFORD NET LOSS $ 607 MLN
October, 18, 19:05:00

РОССИЯ: БОЛЬШЕ НЕФТИ И ГАЗА

Александр Новак отметил рост основных показателей всех отраслей энергетики в прошлом году: «Мы имеем рекордные показатели за прошлый год по добыче нефти, угля. Идёт рост добычи и экспорту газа, в том числе в Европу на уровне 15 процентов. По углю мы наблюдаем рост добычи даже больше уровня прошлого рекордного года. Также отмечается рост производства электроэнергии на 2%, что говорит об оживлении экономики».

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