Weatherford Ending Operations in Iran, Cuba, Syria, Sudan with Loss
by Kerry Laird
|Tuesday, March 18, 2008
Weatherford expects to incur a $40 to $50 million Q1 charge upon pulling out of countries subject to U.S. economic and trade sanctions.
Cuba, Iran, Sudan and Syria are the countries that will be removed from the Weatherford operations portfolio due to sanctions. Weatherford stated in a SEC filing dated March 18 that it plans to completely withdraw from the countries by March 31.
In the filing, Weatherford stated it plans to "begin an orderly discontinuation and winding down of [its] existing businesses in those sanctioned countries."
The specific charges leading to the loss include "writing off unrecoverable assets and incurring liabilities under performance bonds and guarantees for unfinished projects."
Furthermore, the company claimed that additional costs may be incurred "in the future in connection with these withdrawals, including labor claims, contractual claims, penalties assessed by customers, and costs, fines, taxes, and penalties assessed by the local governments."
At this time, Weatherford cannot place a dollar amount on the possible extra costs for retreating from projects and business in the sanctioned countries.
Weatherford first stated it would withdraw its operations from Sudan in September 2007. In a SEC filing dated September 10, 2007, Weatherford stated at that time that it would "discontinue doing business through our foreign subsidiaries in countries that are subject to U.S. economic and trade sanctions, including Cuba, Iran, Sudan and Syria."
The statement further offered that the company would "not enter into any new contracts relating to these countries."
A Weatherford press representative could not be reached for comment regarding the future financial ramifications due to withdrawal from these countries.
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