WEATHERFORD NET LOSS $1.99 BLN

BAAR, Switzerland, Feb. 3, 2016 -- Weatherford International plc (NYSE: WFT) reported a net loss before charges of $102 million ($0.13 net loss per share before charges) on revenues of $2.01 billion for the fourth quarter of 2015. GAAP net loss for the fourth quarter of 2015 was $1.21 billion, or a net loss of $1.54 per share. Full year revenue was down $5.5 billion and operating income declined $1.5 billion primarily due to lower activity, pricing weakness and customer budget reductions in oil and gas markets across the world.

Full Year 2015 Highlights

• Positive free cash flow from operations of $129 million; first positive free cash flow year since 2010; 
• Net debt below $7 billion for the first time since March 2011; 
• Cost reduction targets of 2015 achieved with annualized cost savings of $1.4 billion realized; 
• Industry leading operating income decrementals of 28%; and 
• The best safety record in the Company's history.

Fourth Quarter 2015 Highlights 

• Positive free cash flow from operations of $168 million; 
• Net debt reduction of $191 million; 
• Closed one manufacturing facility and an additional 20 operating facilities in North America; and 
• Successfully completed the previously announced headcount reduction target of 14,000 employees. 

Bernard J. Duroc-Danner, Chairman of the Board, President and Chief Executive Officer, stated, "We have just completed what is probably the most challenging year in our history. North America suffered the brunt of the downturn and our ability to manage our cost base and footprint allowed us to both tier up our customer base and mitigate the debilitating combined impact of activity and pricing reductions. Internationally, our performance has been resilient and our proactive cost management and some market share gains have allowed us to achieve excellent full year operating income decrementals of 19%. In a year of massive decline and reduction in force, Weatherford achieved its highest metric for employee safety worldwide in its recorded history. Safety achievements are seldom compatible with the disruptions of retrenchment.

The brutality and length of this downcycle has challenged the entire industry, both our customer base as well as our peers. Weatherford has responded to this challenge, something that we would probably not have been capable of doing in years past. We adjusted quickly to the new industrial context, took advantage of the downturn, and aggressively transformed our cost base, addressing both the cyclical and structural. We have built on our operating progress with more efficiency, cash discipline, client focus and systematic talent upgrades. Our results demonstrate what can be achieved with relentless focus. This is evident in our 2015 realized annualized savings of nearly $1.4 billion and in our positive free cash flow from operations. We also achieved operating income decrementals of 28% year-over-year which is well ahead of our larger peers and bears no resemblance to the decrementals achieved during the last downturn. The explanation for our performance is simple. It's all about discipline, discernment, and focus. We are a much stronger company today than we have been for a very long time, and we will strengthen further."

Fourth Quarter 2015 Results

Revenue for the fourth quarter of 2015 was $2.01 billion compared with $2.24 billion in the third quarter of 2015 and $3.73 billion in the fourth quarter of 2014. Fourth quarter revenues declined 10% sequentially and 46% from the prior year. Sequentially, North America and Land Drilling Rigs contributed to a majority of the decline. The sequential percentage decrease in international revenues was better than our peers.

Net loss on a non-GAAP basis for the fourth quarter of 2015 was $102 million (net loss of $0.13 per share), compared to a net loss of $42 million in the third quarter of 2015 (net loss of $0.05 per share), and a net income of $252 million in the fourth quarter of the prior year (net income of $0.32 per share). 

GAAP net loss for the fourth quarter of 2015 was $1.21 billion, or a net loss of $1.54 per share. 

After-tax charges of $1.11 billion for the fourth quarter primarily include: 

• $952 million primarily fixed asset impairments, inventory write-downs, and other charges; 
• $85 million of legacy contract charges; 
• $55 million of costs related to severance and facility closures from our 2015 cost reduction plan; and 
• $17 million due to foreign currency devaluation and related charges primarily in Argentina.

Operating income margin of 2.8% for the fourth quarter decreased by 255 basis points sequentially, and declined 1,199 basis points from the fourth quarter of 2014. Sequentially, there was an overall 10% reduction in revenue resulting in decrementals of 28%. Excluding Land Drilling Rigs, our core business recorded excellent sequential decrementals of 17%.

Outlook

Near term, we are confronted with an unusually severe market contraction. In this context, we are managing what we can control. In 2015, we completed the 14,000 headcount reduction target, closed six of our planned seven manufacturing and service facilities and approximately 90 operating facilities in North America, completing 20 in the fourth quarter. These and other actions have generated annualized cost savings of $1.4 billion.

In addition, as we continue to face harsh market conditions, we plan to reduce our cost structure by effecting a further headcount reduction of 6,000 which we expect to have completed during the first half of 2016. We will also close another 9 manufacturing and services facilities. We will also continue to rationalize our operating facility footprint. In line with these cost reduction measures, the full year forecast for capital expenditures will be $300 million, 56% lower than our 2015 spending.

Bernard J. Duroc-Danner, Chairman, President and Chief Executive Officer commented, "We will deliver free cash flow, keeping ample liquidity through this steep downturn. Grounded on careful assessment and based on a disciplined strategy, we are methodically taking our leverage down, predictably and successfully. 2015 was another period of progress. Our actions remain aggressively centered on cash generation, continuing to reduce cyclical and structural costs, increasing efficiencies, while improving service quality and achieving record level safety metrics. Clear productivity gains are being achieved. Our support ratio has dropped 20 points over the last two years, reflecting the permanence of some of our cost reduction efforts. As a company-wide discipline, we continue to have a strict focus on capital allocation and free cash flow generation. Our entire organization is aligned and committed.

As we look forward, we believe that oil prices will respond to the gradual tightening of the supply-demand balance, with increasing demand and diminishing supply. This is inevitable, given the extreme cuts in both capital and operating spend by our customer base around the world. Regardless, we have geared the company and will increasingly do so for a prolonged period of very low activity. We are ready for as protracted a downcycle as markets will dictate.

The near-term outlook is challenging with lower levels of customer activity, continued pricing pressures and seasonal declines across many parts of the Northern Hemisphere. Volatility adds uncertainty to decision making already strained by the distressed level of oil prices. We believe the second half of the year will show a slight recovery underpinned by the stabilizing of commodity prices.

The work we are doing now will show dividends, both in the coming quarters as well as in the inevitable market recovery. We believe we will demonstrate industry leading incrementals, both in earnings and free cash flow when the recovery takes place. Our focus is making our Company what it can be, and what it should be."  

weatherford.com

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