Weatherford's Profit Drops 89% for Second Quarter 2009

Weatherford has reported second quarter 2009 income from continuing operations of $69 million, or $0.10 per diluted share, excluding an after tax loss of $0.04 for investigation and exit costs incurred in connection with the company's withdrawal from sanctioned countries and severance costs principally associated with restructuring activities. Second quarter diluted earnings per share from continuing operations reflect a decrease of 77 percent over the second quarter of 2008 diluted earnings per share from continuing operations of $0.43, before non-recurring items, mainly due to a combination of record low seasonal activity in Canada and greater than anticipated pricing declines in both the United States and Canada.

Second quarter revenues were $1,995 million, or 11 percent lower than the same period last year, against a backdrop of a 35 percent decrease in global rig count. North America was responsible for the decline with revenues decreasing 44 percent against a 50 percent decline in rig count. International revenues were up 17 percent against a nine percent decrease in international rig count.

Sequentially, the company's second quarter diluted earnings per share from continuing operations, before non-recurring items, were $0.17 lower than the first quarter of 2009 diluted earnings per share from continuing operations of $0.27, before non-recurring items. This decline was principally due to the continued curtailment of North American activity during the second quarter of 2009.

North America

Revenues for the quarter were $571 million, which is a 44 percent decrease over the same quarter in the prior year, as compared to a 50 percent rig count decrease. Sequentially, revenues were down 32 percent as compared to a 39 percent rig count decrease. Canadian rig activity registered its lowest levels in the last 10 years, as average rig count for the quarter was 89 rigs. This is 10 percent lower than the 1999 trough of 101 rigs.

Operating income was a loss of $1 million, which is down $225 million compared to the same quarter in the prior year and down $124 million sequentially, as margins were negatively impacted by pricing and activity. Aggressive cost cutting measures and apparent share gains only partially offset the impact of price deterioration and lower activity levels.

Middle East/North Africa/Asia

Second quarter revenues of $593 million were seven percent higher than the second quarter of 2008 and two percent higher than the prior quarter. Strong performances in Saudi Arabia, Kuwait, Yemen, Oman, India, Pakistan and China were partially offset by weakness in Egypt and Libya.

The current quarter's operating income of $124 million decreased five percent as compared to the same quarter in the prior year and decreased eight percent as compared to the prior quarter due to lower pricing.

Europe/West Africa/FSU

Second quarter revenues of $365 million were six percent lower than the second quarter of 2008 and one percent lower than the prior quarter. Central Europe declined significantly, while Russian activity lingered near the trough activity levels seen during the prior quarter.

The current quarter's operating income of $63 million declined 37 percent as compared to the same quarter in the prior year and 16 percent sequentially due to sales mix and lower pricing.

Latin America

Second quarter revenues of $466 million were 72 percent higher than the second quarter of 2008 and flat compared to the prior quarter. Mexico was the top performer on a sequential basis, while significant declines in Venezuela, Argentina and Colombia served as an offset.

The current quarter's operating income of $86 million improved 47 percent as compared to the same quarter in the prior year and was seven percent lower when compared to the first quarter of 2009.
 

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