Leading oilfield services’ company Weatherford International Ltd.’s WFT first-quarter 2015 adjusted loss of 4 cents per share came below the Zacks Consensus Estimate of earnings of a penny. The results also fell substantially from the year-earlier adjusted earnings of 13 cents per share. Shares however rose 0.5% at the close of Wednesday’s trading session based on the company’s cost-cutting measures.
Total revenue, in the first quarter, decreased to $2,794.0 million from $3,727.0 million in the year-ago period. The reported figure also came below the Zacks Consensus Estimate of $3,074.0 million.
Operational Performance
North American revenues for the first quarter were $1.16 billion, down 34% sequentially and 28% from the comparable quarter a year ago. The fall was due to the significant decline in the North American land rig count and pricing pressures that broadly impacted all product lines in the United States and Canada. Operating loss of $10 million was down $296 million sequentially and $213 million from the same quarter in the prior year.
Middle East/North Africa/Asia posted revenues of $533 million, which was down $42 million or 7% sequentially, and $86 million or 14% below from the same quarter in the prior year. The current quarter's operating income of $69 million was up 15% sequentially and up 30% from the same quarter in the prior year. The decline in revenues was due to lower activity and a decline from the seasonally high fourth quarter product sales.
Europe/West Africa/FSU posted revenues of $417 million, which were down $80 million or 16% sequentially, and $99 million or 19% from the year-earlier quarter. The decrease was mainly due to the result of activity-related declines in the North Sea and the normal first-quarter seasonality in Russia, coupled with the impact of the weaker euro, sterling and ruble. The current quarter's operating income of $71 million decreased $24 million, or 25% sequentially and 9% year over year.
Latin American revenues of $486 million were down $178 million or 27% sequentially, and $23 million or 5% year over year. The first-quarter operating income of $98 million was down $15 million year over year. The revenue decline occurred primarily in Venezuela reflecting the change in exchange rates and lower activity in Colombia and Mexico.
Liquidity
As of Mar 31, 2015, Weatherford had $512 million in cash and cash equivalents and long-term debt was $6,278 million. Weatherford spent approximately $224 million in capital expenditures during the reported quarter.
Guidance
As a result of the changing market conditions, Weatherford is aligning its organizational structure and cutting costs. The company started a reduction in force exercise in the first quarter, aiming 5,000 positions, of which over 85% are located in the Western Hemisphere. As a result, the company's headcount at the end of the reported quarter dropped to 49,000 from 56,000 at the start of the year.
Weatherford has now increased its 2015 reduction in force exercise to target 10,000 positions, in place of the previously announced 8,000, with the bulk of the increase being in North America. The company expects its current 18% headcount reduction goal for the year to leave it with about 39,000 employees in its core businesses and 6,000 rig employees. The company plans to complete the terminations by the end of the second quarter, generating expected annualized savings of $640 million.
Weatherford had planned to shut down seven manufacturing facilities in the year. The company also has plans to shut down and consolidate 60 operating facilities across North America by this year end.
Zacks Rank
Weatherford currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks from the same space include Valero Energy Partners L.P. VLP, CNOOC Ltd CEO and Hallador Energy Company HNRG. All these stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment