BAAR, Switzerland,
July 28, 2017 /PRNewswire/ -- Weatherford International
plc (NYSE: WFT) reported a net loss of $171
million, or a loss of $0.17
per share, and a non-GAAP net loss of $282
million before charges and credits ($0.28 non-GAAP loss per share) on revenues of
$1.36 billion for the second quarter
of 2017.
Second Quarter 2017 Highlights
- Excluding the adjustment related to a change in our revenue
recognition in Venezuela,
operating margins improved by 400 basis points sequentially;
- Net cash used in operating activities was $62 million, a sequential improvement of
65%;
- OneStimSM joint venture with Schlumberger on track
to close in the second half of 2017;
- Signed a Memorandum of Understanding (MOU) with Saudi Aramco,
advancing localization in Saudi
Arabia; and
- Signed a technology cooperation agreement with Gazprom Neft
intended to further develop current business relationships and
collaborations between the two companies.
Mark A. McCollum, President and
Chief Executive Officer, commented, "I am pleased that our team has
delivered a solid second quarter performance. We generated
significantly higher incrementals, improved our cash flow compared
to the previous quarter and provided our customers with nearly
flawless service quality execution. Looking forward, I see a lot of
opportunities for further performance improvements, and we have
initiated several projects to unlock and accelerate these
opportunities to drive stronger financial results and meaningfully
reduce our debt and increase market share. We have great
technology, a global presence, outstanding collaborative customer
relationships and a high-caliber workforce, allowing us to be a
partner of choice for our customers in many basins around the
world."
McCollum continued, "The compelling strength of our fundamental
qualities suggests an attractive upside and, by better aligning our
strengths, we will soon have a more focused and effective
organization, forging a solid path towards improving returns and
renewing shareholder trust and value."
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Three Months
Ended
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Change
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(In Millions, Except
Per Share Amounts)
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6/30/2017
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3/31/2017
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|
6/30/2016
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Sequential
|
|
Year-on-Year
|
Total Segment
Results
|
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|
|
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|
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Revenues *
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$
|
1,363
|
|
|
|
$
|
1,386
|
|
|
|
$
|
1,402
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|
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(2)
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|
%
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(3)
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%
|
Segment Operating
Loss *
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$
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(39)
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|
|
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$
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(52)
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|
|
|
$
|
(66)
|
|
|
|
26
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|
%
|
|
41
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%
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Segment Operating
Margin
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(2.8)
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%
|
|
(3.8)
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|
%
|
|
(4.7)
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|
%
|
|
95
bps
|
|
|
185 bps
|
|
Adjusted Segment
Operating Loss **
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|
$
|
(39)
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|
|
|
$
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(52)
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|
|
|
$
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(116)
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|
|
|
26
|
|
%
|
|
67
|
|
%
|
Adjusted Segment
Operating Margin **
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(2.8)
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%
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(3.8)
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|
%
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(8.3)
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%
|
|
95
bps
|
|
|
548
bps
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Adjusted Segment
Incrementals ***
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|
|
|
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|
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|
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60
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%
|
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198
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%
|
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|
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|
|
|
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|
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Net Loss
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$
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(171)
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|
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$
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(448)
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|
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$
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(565)
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|
|
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62
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%
|
|
70
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|
%
|
Non-GAAP Net
Loss
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$
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(282)
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|
|
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$
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(318)
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|
|
|
$
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(253)
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|
|
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12
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%
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(11)
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|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Diluted Loss per
Share
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$
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(0.17)
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|
|
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$
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(0.45)
|
|
|
|
$
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(0.63)
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|
|
|
62
|
|
%
|
|
73
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|
%
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Non-GAAP Diluted Loss
per Share
|
|
$
|
(0.28)
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|
|
|
$
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(0.32)
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|
|
|
$
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(0.28)
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|
|
|
12
|
|
%
|
|
----
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%
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|
* Revenues and
Segment Operating Loss in the second quarter of 2017 include a $42
million reduction in revenue and operating income for the change in
revenue recognition in Venezuela. Excluding this adjustment, the
second quarter 2017 total results would have been $1.405 billion in
Revenues and $3 million in Segment Operating Income.
|
** Adjusted Segment
Operating Loss and Margin here and elsewhere in this filing are
non-GAAP measures and exclude the first quarter 2016 charges and
second quarter 2016 income on the Zubair contract.
|
*** Adjusted Segment
Incrementals here and elsewhere in this press release are
calculated by taking the change in adjusted segment operating loss
over the change in revenues.
|
"We believe our industry will remain range bound within this
'medium-for-longer' price level for some time, until production
growth is moderated. In the interim, we expect continuous
short-term cyclical fluctuations. Adapting to this likely new
paradigm, our industry must transform itself. We will continue to
push innovation, both from a technical and a business model
perspective, and we will deliver operational excellence to bring
the cost of production down to a point at which all participants
can make a decent return.
To improve our position and drive better results, there are
plenty of things well within our ability to execute. We will
accelerate our mission to become a more focused and efficient
company, and we are committed to a path of greater profitability,
reliability and consistency within our organization. Ensuring
flawless execution, discipline and accountability will be at the
center of what we do. As we move forward toward reliable and
sustainable performance, Weatherford will achieve new levels of
success for our employees, customers and shareholders."
Second Quarter 2017 Results
Revenue for the second quarter of 2017 was $1.36 billion compared with $1.39 billion in the first quarter of 2017, or a
2% decrease, and was 3% lower than the $1.40
billion of revenue reported in the second quarter of 2016.
Sequentially, North America
revenue decreased 3% due to the seasonal slowdown in Canada, partially offset by an increase in the
U.S. International revenue declined 2% sequentially, led by a
previously disclosed change in accounting for revenue in
Venezuela, which was almost
entirely offset by improved results and activity in the
Middle East and Russia. Land Drilling Rigs revenue improved
13% sequentially.
During the second quarter, Weatherford determined that the
expected duration to collect revenue from its largest customer in
Venezuela significantly exceeded
the contractual payment terms and represents an implied financing
arrangement. Accordingly, the Company modified its revenue
recognition with this customer in the second quarter to record a
discount reflecting the time value of money and accreting the
discount as interest income over the expected collection period
using the effective interest method. The impact of this change on
the second quarter reduced revenue and increased operating loss by
$42 million and reduced net income by
$35 million ($0.04 diluted net loss per share). Absent this
adjustment, sequential revenue improved 1% and International
revenue improved 3%.
Net loss for the second quarter of 2017 was $171 million (diluted net loss of $0.17 per share), compared to a $448 million loss in the first quarter of 2017
(diluted net loss of $0.45 per
share), and a $565 million loss in
the second quarter of the prior year (diluted net loss of
$0.63 per share).
Non-GAAP adjusted net loss for the second quarter of 2017 was
$282 million (non-GAAP diluted net
loss of $0.28 per share), compared to
a non-GAAP $318 million loss in the
first quarter of 2017 (non-GAAP diluted net loss of $0.32 per share) and a non-GAAP $253 million loss in the second quarter of the
prior year (non-GAAP diluted net loss of $0.28 per share). Excluding the impact of the
Venezuela revenue recognition
adjustment, non-GAAP adjusted net loss for the second quarter was
$0.24 per share.
Non-GAAP adjustments, net of tax, of $111
million of income for the second quarter include:
- $127 million in income related to
the fair value adjustment of the outstanding warrant;
- $29 million in severance and
restructuring charges; and
- $13 million of income from other
charges and credits.
Segment operating margins improved 95 basis points sequentially
and 400 basis points excluding the impact of the change in
Venezuela revenue recognition due
to activity increases in the U.S., Middle
East and Russia. On a
product line basis, Artificial Lift, Reservoir Solutions, Land
Drilling Rigs and Drilling Services drove the margin improvements.
Year-on-year segment operating margin improved 185 basis points due
to reduced operating expenses from the shutdown of Pressure Pumping
operations in North America,
realization of savings from cost reduction measures, and increased
activity in the U.S. and Russia.
Excluding the second quarter 2016 income on the Zubair contract,
adjusted segment operating margin improved 548 basis points.
Cash Flow and Financial Covenants
Net cash used in operating activities was $62 million for the second quarter of 2017,
including $107 million of debt
interest payments, $40 million of
cash severance and restructuring costs, and $30 million of SEC legal settlement costs,
partially offset by $93 million of
positive cash inflows from collection of other receivables,
insurance proceeds and favorable legal settlements. Capital
expenditures of $42 million increased
slightly by $2 million or 5%
sequentially, and increased $11
million or 35% from the same quarter in the prior year. We
remain in compliance with our financial covenants as defined in our
revolving and secured term loan credit facilities as of
June 30, 2017. Based on our current
financial projections, we believe we will continue to remain in
compliance with these covenants for the remainder of 2017.
Technology Highlights
Weatherford announced the commercial release of the following
technologies during the quarter:
- The ForeSite™ production optimization platform combines
physics-based models with advanced data analytics to improve
performance across wells, reservoirs and surface facilities. This
release is the first in a series of integrated software offerings
that will combine proven Weatherford production optimization
technologies with the Internet of Things, cloud computing and
advanced analytics to enable complete asset management.
- The Raptor™ 2.0 cased-hole evaluation system, which has been
tested and proven in more than 200 field runs, combines a
pulsed-neutron wireline logging device with advanced petrophysical
workflows. The system provides enhanced actionable reservoir data
and enables operators to identify and quantify reserves in
conventional and tight-gas reservoirs during completion, production
and rejuvenation operations.
- A premium version of the RipTide® RFID drilling
reamer incorporates advanced cutter technology developed through
collaborative efforts between Weatherford and US Synthetic, a
leading provider of polycrystalline diamond cutters for the oil and
gas industry. As part of the collaborative project, Weatherford
developed the ReamSync™ borehole enlargement performance system,
which includes a predictive cutter and formation interaction
software used in the design of cutter blocks.
- The WFX0 system is the industry's first fully integrated
gravel-pack system to achieve an API/ISO V0 rating, which validates
that it has been tested to the industry's highest standards with
zero gas leakage. By leveraging several V0-rated Weatherford
technologies including the TerraForm® packer, the system
enables gravel-pack completion of multiple openhole zones in a
single trip and achieves cased-hole functionality in an openhole
environment.
Region and Segment Highlights
North America
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Three Months
Ended
|
|
|
Change
|
|
(In
Millions)
|
|
6/30/2017
|
|
|
3/31/2017
|
|
|
6/30/2016
|
|
|
Sequential
|
|
|
Year-on-Year
|
|
North
America
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
475
|
|
|
|
$
|
490
|
|
|
|
$
|
401
|
|
|
|
(3)
|
|
%
|
|
18
|
|
%
|
Segment Operating
Income (Loss)
|
|
$
|
2
|
|
|
|
$
|
(18)
|
|
|
|
$
|
(101)
|
|
|
|
114
|
|
%
|
|
103
|
|
%
|
Segment Operating
Margin
|
|
0.5
|
|
%
|
|
(3.7)
|
|
%
|
|
(25.2)
|
|
%
|
|
428
bps
|
|
|
2,570
bps
|
|
Second quarter revenues of $475
million were down $15 million
or 3% sequentially, and up $74
million, or 18%, over the same period last year. Sequential
revenues decreased primarily due to the seasonal spring break-up in
Canada offset by an increase in
revenue across all product lines in the U.S. as a result of the
increased drilling and completion activity. Excluding the impact of
the U.S. Pressure Pumping operations that shut down during the
fourth quarter 2016, year-on-year revenues improved 37%.
Second quarter segment operating income of $2 million (0.5% margin) improved by $20 million sequentially from a loss of
$18 million (-3.7% margin).
Sequential margin improvement was driven by a lower cost structure
in the U.S. associated with a favorable product mix and partially
offset by the seasonal slowdown in Canada. Compared to the same period last year,
second quarter segment operating income improved by $103 million or 103% due to increased activity
levels, a significantly lower loss in Pressure Pumping following
the shut-down of operations in the fourth quarter of 2016 and the
realization of significant savings from cost cutting measures taken
over the past quarters.
Operational highlights in North
America during the second quarter include:
- In the Permian Basin, Weatherford is increasingly installing
Rotaflex® long-stroke pumping units as an alternative to or
replacement for electric submersible pump (ESP) systems. Rotaflex
units are especially well suited to unconventional applications,
have a much longer run life and can reduce energy costs by 30% to
50% compared to ESP systems.
- Contracts for Artificial Lift systems remained strong in
Western Canada. In addition to the
contract for more than 40 pumping units reported in Q1, Weatherford
was awarded 76 more units to be deployed in the second half of
2017.
- The new Raptor™ 2.0 cased-hole evaluation system was deployed
to assess the remaining production potential of three shut-in
unconventional wells in Western
Canada. Data from the Raptor 2.0 system identified untapped
oil- and gas-producing zones in two of the three wells. Using this
data, the operator has established initial production and is
planning additional recompletion campaigns in the reservoir.
International Operations
|
|
Three Months
Ended
|
|
Change
|
(In
Millions)
|
|
6/30/2017
|
|
3/31/2017
|
|
6/30/2016
|
|
Sequential
|
|
Year-on-Year
|
International
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues *
|
|
$
|
787
|
|
|
|
$
|
807
|
|
|
|
$
|
892
|
|
|
|
(2)
|
|
%
|
|
(12)
|
|
%
|
Segment Operating
Income (Loss) *
|
|
$
|
(21)
|
|
|
|
$
|
(4)
|
|
|
|
$
|
52
|
|
|
|
(372)
|
|
%
|
|
(140)
|
|
%
|
Adjusted Segment
Operating Income (Loss) **
|
|
$
|
(21)
|
|
|
|
$
|
(4)
|
|
|
|
$
|
2
|
|
|
|
(372)
|
|
%
|
|
(1,340)
|
|
%
|
Adjusted Segment
Operating Margin **
|
|
(2.6)
|
|
%
|
|
(0.5)
|
|
%
|
|
0.2
|
|
%
|
|
(203 bps)
|
|
|
(274 bps)
|
|
|
* Revenues and
Segment Operating Loss in the second quarter of 2017 include a $42
million reduction in revenue and operating income for the change in
revenue recognition in Venezuela. Excluding this adjustment, the
second quarter 2017 International results would have been $829
million in Revenues and $21 million in Segment Operating
Income.
|
** Adjusted Segment
Operating Income (Loss) and Margin here and elsewhere in this
filing are non-GAAP measures and exclude the first quarter 2016
charges and second quarter 2016 income on the Zubair
contract.
|
Second quarter revenues of $787
million were down 2% sequentially and down 12% year-on-year.
Second quarter segment operating loss of $21
million (-2.6% margin) deteriorated $17 million from an operating loss of
$4 million (-0.5% margin) in the
prior quarter. Second quarter operating loss deteriorated
$73 million year-on-year, and second
quarter adjusted segment operating loss, which excluded the effect
from the Zubair contract in 2016, deteriorated by $23 million year-on-year.
Second quarter revenues of $203
million were down $39 million,
or 16% sequentially, and down $46
million, or 18% compared to the same quarter last year.
Second quarter operating loss of $35
million (-16.9% margin) was down $44
million sequentially from operating income of $9 million (3.8% margin) and down
$36 million from operating income of
$1 million (0.6% margin) compared to
the same period last year.
The sequential and year-on-year declines in second quarter
revenues and operating income were almost entirely due to the
$42 million change in our accounting
for revenue in Venezuela.
Excluding this negative impact, second quarter revenues of
$245 million were up $3 million, or 1% sequentially, and down
$4 million, or 2% compared to the
same quarter last year, and second quarter operating income of
$7 million (2.9% margin) was down
$2 million sequentially, and up
$6 million compared to the same
period last year. Sequentially, the improvements in revenue were
primarily driven by activity increases in Argentina.
Operational highlights in Latin
America during the second quarter include:
- In a shallow-water integrated services project in the
Gulf of Mexico, Weatherford set a
new field record in the first well by drilling a directional
offshore well to total depth 7 days faster than the previous field
record.
- Weatherford was awarded a 5-year contract for the provision of
Pressure Pumping services in Chile, with a total value of over $150 million.
- In Colombia, Weatherford won a
contract with a major customer for solids control and waste
management services in drilling and completion operations. Work is
expected to start in August.
- In Argentina, Weatherford won
two sizable contracts for hydraulic fracturing services that will
increase the utilization of existing pressure pumping fleets in the
country and will create further opportunities to provide integrated
completions services to the unconventional Argentina market.
- Europe/Sub-Sahara
Africa/Russia
Second quarter revenues of $244
million were flat sequentially and compared to the same
quarter last year. Second quarter operating income of $5 million (2.0% margin) increased from operating
loss of $10 million (-4.1% margin)
sequentially, and increased from operating income of $1 million (0.3% margin) year-on-year. Sequential
revenues remained steady due to recovery from the seasonal decline
in Russia, partially offset by a
decrease in Secure Drilling product sales in Europe while activity in Sub-Sahara Africa
remained flat in a challenged market. Operating income improved
primarily on the higher activity in Russia and further cost reduction measures in
Sub-Sahara Africa.
Operational highlights in Europe/Sub-Sahara Africa/Russia during the second quarter include:
- After demonstrating high levels of service quality and
efficiency on a one-well project in the North Sea, Weatherford
replaced the incumbent on a 5-year, logging-while-drilling contract
with options for extension.
- Weatherford and Gazprom Neft signed a technology cooperation
agreement at the St. Petersburg International Economic Forum. The
agreement is valid for five years and is intended to further
develop current business relationships and collaborations between
the two companies. Under the signed document, the parties agree to
exchange operational and technological information for analysis,
with the aim of identifying innovative solutions that will improve
the efficiency and operational performance of both companies.
- Middle East/North Africa/Asia
Pacific
Second quarter revenues of $340
million were up 6% sequentially and down 15% from the same
quarter in the prior year. Excluding the revenue related to the
Zubair contract, second quarter revenue of $331 million was up 4% sequentially and flat
compared to the same period last year. Second quarter segment
operating income of $9 million (2.8%
margin) improved from an operating loss of $3 million (-1.1% margin) in the prior quarter
and deteriorated from an operating income of $50 million (12.5% margin) year-on-year.
Excluding the income on the Zubair contract, second quarter 2016
adjusted segment operating income was nil (-0.1% margin), resulting
in a year-on-year increase of $9
million compared to the current quarter adjusted segment
operating income of $9 million (2.8%
margin). The increase in sequential revenue and operating results
was primarily due to higher activity in the United Arab Emirates, Kuwait and Thailand.
Operational highlights in the Middle
East/North
Africa/Asia Pacific during
the second quarter include:
- Weatherford won a turnkey project related to rigless well
testing operations and mobilized operations in June 2017. In addition Weatherford was invited to
participate in large turnkey well construction projects for a major
Middle Eastern NOC.
- Using technologies such as the Revolution®
rotary-steerable system (RSS), the hostile-environment-logging
(HEL) system and logging-while-drilling (LWD) tools, Weatherford
delivered record-setting Directional Drilling results in five
different wells for an operator in the Middle East. In one well, Weatherford achieved
a rate of penetration 80% higher than the field average.
- In a Gulf Cooperation Council country, Weatherford provided
complete characterization of a challenging well in a prolific
field. By deploying Compact™ logging and formation testing tools on
drillpipe, Weatherford saved the operator approximately 60 hours of
rig time compared to conventional pipe-conveyed logging operations.
The Compact tools acquired high-quality nuclear, gamma,
dual-neutron and array-induction logs, as well as more than 25
pressure points throughout the formation.
Land Drilling Rigs
Second quarter revenues of $101
million were up $12 million,
or 13% sequentially and down $8
million, or 7% compared to the same quarter in the prior
year. Second quarter operating loss of $20
million (-20.7% margin) improved sequentially by
$10 million from an operating loss of
$30 million (-33.3% margin) and
deteriorated year-on-year by $3
million from an operating loss of $17
million (-15.7%). The sequential improvement in revenues and
operating results was due to improved operational efficiency, and
from Algeria and Kuwait being fully operational during the
quarter. During the second quarter of 2017, the Land Drilling Rigs
segment returned to positive EBITDA (segment operating income
before interest, taxes, depreciation and amortization) with
improved rig utilization and lower cost structure. The structural
changes to operational processes and efficiencies implemented in
the first half of this year, as well as potential opportunities to
restart operations in multiple geographies should allow for
continued improvement and sustained returns throughout the second
half of 2017 and beyond.
Operational highlights in the Land Drilling Rigs business during
the second quarter include:
- Weatherford Land Drilling Rigs achieved zero lost-time
incidents globally in Q2 2017. The business also celebrated safety
milestones on a number of individual rigs, including 16 years
without a lost-time incident on a rig in Saudi Arabia. Additionally, Weatherford rig
operations in Oman and
Kuwait received ISO 9001
certification in recognition of quality management systems.
- Weatherford won a 2-year contract for a major NOC with the
option to extend for one more year for two 1,500 HP drilling rigs.
Over the initial 2-year period the total contract value is
estimated at $72 million and the
1-year extension is valued at $35
million.
- An operator in Algeria
recognized Weatherford Land Drilling Rigs for achieving a new
drilling record. The team reached a total depth of 2,150 meters in
20 days, more than 9 days ahead of plan.
About Weatherford
Weatherford is one of the largest multinational oilfield service
companies providing innovative solutions, technology and services
to the oil and gas industry. The Company operates in over 90
countries and has a network of approximately 860 locations,
including manufacturing, service, research and development, and
training facilities and employs approximately 29,500 people. For
more information, visit www.weatherford.com and connect with
Weatherford on LinkedIn, Facebook, Twitter and YouTube.
Conference Call
The Company will host a conference call with financial analysts
to discuss the quarterly results on July 28, 2017, at
8:30 a.m. eastern time (ET),
7:30 a.m. central time (CT).
Weatherford invites investors to listen to the call live via the
Company's website, at
http://ir.weatherford.com/conference-call-details. A recording of
the conference call and transcript of the call will be available in
that section of the website shortly after the call ends.
Contacts:
|
|
Christoph
Bausch
|
+1.713.836.4615
|
|
|
Executive Vice
President and Chief Financial Officer
|
|
|
|
|
|
|
|
Karen
David-Green
|
+1.713.836.7430
|
|
|
Vice President –
Investor Relations, Marketing and Communications
|
|
Forward-Looking Statements
This news release contains, and the conference call announced in
this release may include, forward-looking statements. These
forward-looking statements include, among other things, the
Company's quarterly non-GAAP earnings per share, effective tax
rate, net debt, forecasts or expectations regarding business
outlook, and capital expenditures, and are also generally
identified by the words "believe," "project," "expect,"
"anticipate," "estimate," "outlook," "budget," "intend,"
"strategy," "plan," "guidance," "may," "should," "could," "will,"
"would," "will be," "will continue," "will likely result," and
similar expressions, although not all forward-looking statements
contain these identifying words. Such statements are based upon the
current beliefs of Weatherford's management, and are subject to
significant risks, assumptions and uncertainties. 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. Readers are
also cautioned that forward-looking statements are only predictions
and may differ materially from actual future events or results,
including possible changes in the expected savings associated with
our cost cutting measures, including the closing of our pressure
pumping operations; the success and closing of our joint ventures
and strategic partnerships; and the changes in spending by our
clients and customers. Forward-looking statements are also affected
by the risk factors described in the Company's Annual Report on
Form 10-K for the year ended December 31,
2016, the Company's Quarterly Reports on Form 10-Q, and
those set forth from time-to-time in the Company's other filings
with the Securities and Exchange Commission. 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 plc
|
Condensed
Consolidated Statements of Operations
|
(Unaudited)
|
(In Millions, Except
Per Share Amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
6/30/2017
|
|
6/30/2016
|
|
6/30/2017
|
|
6/30/2016
|
|
Net
Revenues:
|
|
|
|
|
|
|
|
|
|
North
America
|
|
$
|
475
|
|
|
$
|
401
|
|
|
$
|
965
|
|
|
$
|
944
|
|
|
Middle East/North
Africa/Asia Pacific
|
|
340
|
|
|
400
|
|
|
661
|
|
|
761
|
|
|
Europe/SSA/Russia
|
|
244
|
|
|
243
|
|
|
488
|
|
|
500
|
|
|
Latin
America
|
|
203
|
|
|
249
|
|
|
445
|
|
|
554
|
|
|
Land Drilling
Rigs
|
|
101
|
|
|
109
|
|
|
190
|
|
|
228
|
|
|
Total
Net Revenues
|
|
1,363
|
|
|
1,402
|
|
|
2,749
|
|
|
2,987
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(Loss):
|
|
|
|
|
|
|
|
|
|
North
America
|
|
2
|
|
|
(101)
|
|
|
(16)
|
|
|
(229)
|
|
|
Middle East/North
Africa/Asia
|
|
9
|
|
|
—
|
|
|
6
|
|
|
6
|
|
|
Europe/SSA/Russia
|
|
5
|
|
|
1
|
|
|
(5)
|
|
|
—
|
|
|
Latin
America
|
|
(35)
|
|
|
1
|
|
|
(26)
|
|
|
45
|
|
|
Land Drilling
Rigs
|
|
(20)
|
|
|
(17)
|
|
|
(50)
|
|
|
(43)
|
|
|
Adjusted
Segment Operating Loss
|
|
(39)
|
|
|
(116)
|
|
|
(91)
|
|
|
(221)
|
|
|
Research and
Development
|
|
(36)
|
|
|
(41)
|
|
|
(75)
|
|
|
(86)
|
|
|
Corporate
Expenses
|
|
(33)
|
|
|
(34)
|
|
|
(66)
|
|
|
(77)
|
|
|
Other Charges,
Net
|
|
(19)
|
|
|
(269)
|
|
|
(91)
|
|
|
(523)
|
|
|
Total
Operating Loss
|
|
(127)
|
|
|
(460)
|
|
|
(323)
|
|
|
(907)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income
(Expense):
|
|
|
|
|
|
|
|
|
|
Interest Expense,
Net
|
|
(138)
|
|
|
(119)
|
|
|
(279)
|
|
|
(234)
|
|
|
Bond Tender Premium,
Net
|
|
—
|
|
|
(78)
|
|
|
—
|
|
|
(78)
|
|
|
Warrant Fair Value
Adjustment
|
|
127
|
|
|
—
|
|
|
65
|
|
|
—
|
|
|
Currency Devaluation
Charges
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(31)
|
|
|
Other Expense,
Net
|
|
(10)
|
|
|
(7)
|
|
|
(21)
|
|
|
(6)
|
|
|
Net Loss Before
Income Taxes
|
|
(148)
|
|
|
(664)
|
|
|
(558)
|
|
|
(1,256)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Tax
(Provision) Benefit
|
|
(17)
|
|
|
102
|
|
|
(50)
|
|
|
203
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
(165)
|
|
|
(562)
|
|
|
(608)
|
|
|
(1,053)
|
|
|
Net Income
Attributable to Noncontrolling Interests
|
|
6
|
|
|
3
|
|
|
11
|
|
|
10
|
|
|
Net Loss Attributable
to Weatherford
|
|
$
|
(171)
|
|
|
$
|
(565)
|
|
|
$
|
(619)
|
|
|
$
|
(1,063)
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss Per Share
Attributable to Weatherford:
|
|
|
|
|
|
|
|
|
|
Basic &
Diluted
|
|
$
|
(0.17)
|
|
|
$
|
(0.63)
|
|
|
$
|
(0.63)
|
|
|
$
|
(1.24)
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Shares Outstanding:
|
|
|
|
|
|
|
|
|
|
Basic &
Diluted
|
|
990
|
|
|
899
|
|
|
989
|
|
|
856
|
|
|
Weatherford
International plc
|
Selected
Statements of Operations Information
|
(Unaudited)
|
(In
Millions)
|
|
Three Months
Ended
|
|
6/30/2017
|
|
3/31/2017
|
|
12/31/2016
|
|
9/30/2016
|
|
6/30/2016
|
Net
Revenues:
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
475
|
|
|
$
|
490
|
|
|
$
|
485
|
|
|
$
|
449
|
|
|
$
|
401
|
|
Middle East/North
Africa/Asia Pacific
|
340
|
|
|
321
|
|
|
363
|
|
|
329
|
|
|
400
|
|
Europe/SSA/Russia
|
244
|
|
|
244
|
|
|
214
|
|
|
225
|
|
|
243
|
|
Latin
America
|
203
|
|
|
242
|
|
|
250
|
|
|
255
|
|
|
249
|
|
Land Drilling
Rigs
|
101
|
|
|
89
|
|
|
94
|
|
|
98
|
|
|
109
|
|
Total Net
Revenues
|
$
|
1,363
|
|
|
$
|
1,386
|
|
|
$
|
1,406
|
|
|
$
|
1,356
|
|
|
$
|
1,402
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
6/30/2017
|
|
3/31/2017
|
|
12/31/2016
|
|
9/30/2016
|
|
6/30/2016
|
Operating Income
(Loss):
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
2
|
|
|
$
|
(18)
|
|
|
$
|
(58)
|
|
|
$
|
(95)
|
|
|
$
|
(101)
|
|
Middle East/North
Africa/Asia Pacific
|
9
|
|
|
(3)
|
|
|
9
|
|
|
(8)
|
|
|
—
|
|
Europe/SSA/Russia
|
5
|
|
|
(10)
|
|
|
(8)
|
|
|
(3)
|
|
|
1
|
|
Latin
America
|
(35)
|
|
|
9
|
|
|
6
|
|
|
14
|
|
|
1
|
|
Land Drilling
Rigs
|
(20)
|
|
|
(30)
|
|
|
(25)
|
|
|
(19)
|
|
|
(17)
|
|
Adjusted
Segment Operating Loss
|
(39)
|
|
|
(52)
|
|
|
(76)
|
|
|
(111)
|
|
|
(116)
|
|
Research and
Development
|
(36)
|
|
|
(39)
|
|
|
(40)
|
|
|
(33)
|
|
|
(41)
|
|
Corporate
Expenses
|
(33)
|
|
|
(33)
|
|
|
(32)
|
|
|
(30)
|
|
|
(34)
|
|
Other Charges,
Net
|
(19)
|
|
|
(72)
|
|
|
(251)
|
|
|
(771)
|
|
|
(269)
|
|
Total Operating
Loss
|
$
|
(127)
|
|
|
$
|
(196)
|
|
|
$
|
(399)
|
|
|
$
|
(945)
|
|
|
$
|
(460)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
6/30/2017
|
|
3/31/2017
|
|
12/31/2016
|
|
9/30/2016
|
|
6/30/2016
|
Product and
Service Line Revenues
(a):
|
|
|
|
|
|
|
|
|
|
Formation Evaluation
and Well Construction
|
$
|
811
|
|
|
$
|
824
|
|
|
$
|
773
|
|
|
$
|
765
|
|
|
$
|
806
|
|
Completion and
Production
|
451
|
|
|
473
|
|
|
539
|
|
|
493
|
|
|
487
|
|
Land Drilling
Rigs
|
101
|
|
|
89
|
|
|
94
|
|
|
98
|
|
|
109
|
|
Total Product Service
Line Revenues
|
$
|
1,363
|
|
|
$
|
1,386
|
|
|
$
|
1,406
|
|
|
$
|
1,356
|
|
|
$
|
1,402
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
6/30/2017
|
|
3/31/2017
|
|
12/31/2016
|
|
9/30/2016
|
|
6/30/2016
|
Depreciation and
Amortization:
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
40
|
|
|
$
|
40
|
|
|
$
|
41
|
|
|
$
|
55
|
|
|
$
|
58
|
|
Middle East/North
Africa/Asia Pacific
|
51
|
|
|
51
|
|
|
52
|
|
|
60
|
|
|
60
|
|
Europe/SSA/Russia
|
39
|
|
|
39
|
|
|
41
|
|
|
45
|
|
|
48
|
|
Latin
America
|
48
|
|
|
51
|
|
|
55
|
|
|
56
|
|
|
56
|
|
Land Drilling
Rigs
|
23
|
|
|
24
|
|
|
22
|
|
|
22
|
|
|
23
|
|
Research and
Development and Corporate
|
3
|
|
|
3
|
|
|
4
|
|
|
4
|
|
|
4
|
|
Total Depreciation and
Amortization
|
$
|
204
|
|
|
$
|
208
|
|
|
$
|
215
|
|
|
$
|
242
|
|
|
$
|
249
|
|
|
|
(a)
|
Formation Evaluation
and Well Construction includes Managed-Pressure Drilling, Drilling
Services, Tubular Running Services, Drilling Tools and Rental
Equipment, Wireline Services, Testing and Production Services,
Re-entry and Fishing Services, Cementing Products, Liner Systems,
Reservoir Solutions and Surface Logging. Completion and Production
includes Artificial Lift Systems, Stimulation and Completion
Systems.
|
We report our financial results in accordance with U.S.
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 of prior periods.
The non-GAAP amounts shown below should not be considered as
substitutes for operating income, provision for income taxes, net
income or other data prepared and reported in accordance with GAAP,
but should be viewed in addition to the Company's reported results
prepared in accordance with GAAP.
Weatherford
International plc
|
Reconciliation of
GAAP to Non-GAAP Financial Measures
|
(Unaudited)
|
(In Millions, Except
Per Share Amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
6/30/2017
|
|
3/31/2017
|
|
6/30/2016
|
|
6/30/2017
|
|
6/30/2016
|
|
Operating
Loss:
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating
Loss
|
|
$
|
(127)
|
|
|
$
|
(196)
|
|
|
$
|
(460)
|
|
|
$
|
(323)
|
|
|
$
|
(907)
|
|
|
Severance,
Restructuring and Exited Businesses
|
|
31
|
|
|
75
|
|
|
51
|
|
|
106
|
|
|
128
|
|
|
Litigation Charges,
Net
|
|
—
|
|
|
—
|
|
|
114
|
|
|
—
|
|
|
181
|
|
|
Impairments, Asset
Write-Downs and Other (a)
|
|
(12)
|
|
|
(3)
|
|
|
154
|
|
|
(15)
|
|
|
212
|
|
|
Legacy
Contract
|
|
—
|
|
|
—
|
|
|
(50)
|
|
|
—
|
|
|
2
|
|
|
Total Non-GAAP
Adjustments
|
|
19
|
|
|
72
|
|
|
269
|
|
|
91
|
|
|
523
|
|
|
Non-GAAP Adjusted
Operating Loss
|
|
$
|
(108)
|
|
|
$
|
(124)
|
|
|
$
|
(191)
|
|
|
$
|
(232)
|
|
|
$
|
(384)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss Before Income
Taxes:
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Loss Before
Income Taxes
|
|
$
|
(148)
|
|
|
$
|
(410)
|
|
|
$
|
(664)
|
|
|
$
|
(558)
|
|
|
$
|
(1,256)
|
|
|
Operating Income
Adjustments
|
|
19
|
|
|
72
|
|
|
269
|
|
|
91
|
|
|
523
|
|
|
Bond Tender Premium,
Net
|
|
—
|
|
|
—
|
|
|
78
|
|
|
—
|
|
|
78
|
|
|
Warrant Fair Value
Adjustment
|
|
(127)
|
|
|
62
|
|
|
—
|
|
|
(65)
|
|
|
—
|
|
|
Currency Devaluation
Charges
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31
|
|
|
Non-GAAP Loss Before
Income Taxes
|
|
$
|
(256)
|
|
|
$
|
(276)
|
|
|
$
|
(317)
|
|
|
$
|
(532)
|
|
|
$
|
(624)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Provision)
Benefit for Income Taxes:
|
|
|
|
|
|
|
|
|
|
|
|
GAAP (Provision)
Benefit for Income Taxes
|
|
$
|
(17)
|
|
|
$
|
(33)
|
|
|
$
|
102
|
|
|
$
|
(50)
|
|
|
$
|
203
|
|
|
Tax Effect on Non-GAAP
Adjustments
|
|
(3)
|
|
|
(4)
|
|
|
(35)
|
|
|
(7)
|
|
|
(61)
|
|
|
Non-GAAP (Provision)
Benefit for Income Taxes
|
|
$
|
(20)
|
|
|
$
|
(37)
|
|
|
$
|
67
|
|
|
$
|
(57)
|
|
|
$
|
142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
Attributable to Weatherford:
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net
Loss
|
|
$
|
(171)
|
|
|
$
|
(448)
|
|
|
$
|
(565)
|
|
|
$
|
(619)
|
|
|
$
|
(1,063)
|
|
|
Non-GAAP Adjustments,
net of tax
|
|
(111)
|
|
|
130
|
|
|
312
|
|
|
19
|
|
|
571
|
|
|
Non-GAAP Net
Loss
|
|
$
|
(282)
|
|
|
$
|
(318)
|
|
|
$
|
(253)
|
|
|
$
|
(600)
|
|
|
$
|
(492)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Loss Per
Share Attributable to Weatherford:
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted Loss per
Share
|
|
$
|
(0.17)
|
|
|
$
|
(0.45)
|
|
|
$
|
(0.63)
|
|
|
$
|
(0.63)
|
|
|
$
|
(1.24)
|
|
|
Non-GAAP Adjustments,
net of tax
|
|
(0.11)
|
|
|
0.13
|
|
|
0.35
|
|
|
0.02
|
|
|
0.67
|
|
|
Non-GAAP Diluted Loss
per Share
|
|
$
|
(0.28)
|
|
|
$
|
(0.32)
|
|
|
$
|
(0.28)
|
|
|
$
|
(0.61)
|
|
|
$
|
(0.57)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Effective Tax
Rate (b)
|
|
(12)%
|
|
|
(8)%
|
|
|
15
|
%
|
|
(9)%
|
|
|
16
|
%
|
|
Non-GAAP Effective
Tax Rate (c)
|
|
(8)%
|
|
|
(14)%
|
|
|
21
|
%
|
|
(11)%
|
|
|
23
|
%
|
|
|
|
(a)
|
Impairments, asset
write-downs and other of $154 million in the second quarter of 2016
include $84 million to adjust a note from our largest customer in
Venezuela to fair value and other impairments and write-offs of $70
million.
|
|
|
(b)
|
GAAP Effective Tax
Rate is the GAAP provision for income taxes divided by GAAP income
before income taxes.
|
|
|
(c)
|
Non-GAAP Effective
Tax Rate is the Non-GAAP provision for income taxes divided by
Non-GAAP income before income taxes and calculated in
thousands.
|
Weatherford
International plc
|
Selected Balance
Sheet Data
|
(Unaudited)
|
(In
Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/30/2017
|
|
3/31/2017
|
|
12/31/2016
|
|
9/30/2016
|
|
6/30/2016
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash
Equivalents
|
|
$
|
584
|
|
|
$
|
546
|
|
|
$
|
1,037
|
|
|
$
|
440
|
|
|
$
|
452
|
|
Accounts Receivable,
Net
|
|
1,165
|
|
|
1,292
|
|
|
1,383
|
|
|
1,414
|
|
|
1,484
|
|
Inventories,
Net
|
|
1,728
|
|
|
1,700
|
|
|
1,802
|
|
|
1,917
|
|
|
2,195
|
|
Assets Held for
Sale
|
|
929
|
|
|
860
|
|
|
23
|
|
|
11
|
|
|
14
|
|
Property, Plant and
Equipment, Net
|
|
4,111
|
|
|
4,265
|
|
|
4,480
|
|
|
4,708
|
|
|
5,247
|
|
Goodwill and
Intangibles, Net
|
|
2,527
|
|
|
2,602
|
|
|
3,045
|
|
|
3,104
|
|
|
3,182
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
Accounts
Payable
|
|
837
|
|
|
803
|
|
|
845
|
|
|
666
|
|
|
790
|
|
Liabilities Held for
Sale
|
|
90
|
|
|
96
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Short-term Borrowings
and Current Portion of Long-term Debt
|
|
152
|
|
|
240
|
|
|
179
|
|
|
555
|
|
|
290
|
|
Long-term
Debt
|
|
7,538
|
|
|
7,299
|
|
|
7,403
|
|
|
6,937
|
|
|
6,943
|
|
Weatherford
International plc
|
Net
Debt
|
(Unaudited)
|
(In
Millions)
|
|
|
|
|
|
|
|
Change in Net Debt
for the Three Months Ended 6/30/2017:
|
|
|
|
|
|
|
Net Debt at
3/31/2017
|
|
|
|
|
|
$
|
(6,993)
|
|
Operating
Loss
|
|
|
|
|
|
(127)
|
|
Depreciation and
Amortization
|
|
|
|
|
|
204
|
|
Capital Expenditures
for Property, Plant and Equipment
|
|
|
|
|
|
(42)
|
|
Acquisition of Assets
Held for Sale
|
|
|
|
|
|
(3)
|
|
Proceeds from Sale of
Assets
|
|
|
|
|
|
21
|
|
Increase in Working
Capital
|
|
|
|
|
|
(78)
|
|
Proceeds from Note
Receivable
|
|
|
|
|
|
59
|
|
Asset Write-Downs and
Other Charges
|
|
|
|
|
|
9
|
|
Accrued Litigation and
Settlements
|
|
|
|
|
|
(32)
|
|
Income Taxes
Paid
|
|
|
|
|
|
(4)
|
|
Interest
Paid
|
|
|
|
|
|
(107)
|
|
Other
|
|
|
|
|
|
(13)
|
|
Net Debt at
6/30/2017
|
|
|
|
|
|
$
|
(7,106)
|
|
|
|
|
|
|
|
|
Change in Net Debt
for the Six Months Ended 6/30/2017:
|
|
|
|
|
|
|
Net Debt at
12/31/2016
|
|
|
|
|
|
$
|
(6,545)
|
|
Operating
Loss
|
|
|
|
|
|
(323)
|
|
Depreciation and
Amortization
|
|
|
|
|
|
412
|
|
Capital Expenditures
for Property, Plant and Equipment
|
|
|
|
|
|
(82)
|
|
Acquisition of Assets
Held for Sale
|
|
|
|
|
|
(243)
|
|
Proceeds from Sale of
Assets
|
|
|
|
|
|
25
|
|
Increase in Working
Capital
|
|
|
|
|
|
(75)
|
|
Proceeds from Note
Receivable
|
|
|
|
|
|
59
|
|
Asset Write-Downs and
Other Charges
|
|
|
|
|
|
28
|
|
Inventory
Charges
|
|
|
|
|
|
6
|
|
Accrued Litigation and
Settlements
|
|
|
|
|
|
(62)
|
|
Income Taxes
Paid
|
|
|
|
|
|
(47)
|
|
Interest
Paid
|
|
|
|
|
|
(251)
|
|
Other
|
|
|
|
|
|
(8)
|
|
Net Debt at
6/30/2017
|
|
|
|
|
|
$
|
(7,106)
|
|
|
|
|
|
|
|
|
Components of Net
Debt
|
|
6/30/2017
|
|
3/31/2017
|
|
12/31/2016
|
Cash
|
|
$
|
584
|
|
|
$
|
546
|
|
|
$
|
1,037
|
|
Short-term Borrowings
and Current Portion of Long-term Debt
|
|
(152)
|
|
|
(240)
|
|
|
(179)
|
|
Long-term
Debt
|
|
(7,538)
|
|
|
(7,299)
|
|
|
(7,403)
|
|
Net Debt
|
|
$
|
(7,106)
|
|
|
$
|
(6,993)
|
|
|
$
|
(6,545)
|
|
|
"Net Debt" is defined
as debt less cash. Management believes that it provides useful
information regarding our level of indebtedness by reflecting cash
that could be used to repay debt.
|
|
|
Working capital is
defined as accounts receivable plus inventory less accounts
payable.
|
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