Weatherford 4Q 2011 Revenue Up 27%
Weatherford International Ltd. reported preliminary fourth quarter 2011 pre-tax income of $254 million, or $352 million after excluding pre-tax losses of $98 million. The excluded items were composed of a $67 million charge for assets principally in Libya, as well as $31 million for exit, restructuring, investigation and other costs.
Fourth quarter revenues of $3.71 billion were the highest in the company's history. Revenues were 10 percent higher sequentially and 27 percent higher than the same period last year. North America revenue was up five percent sequentially and up 34 percent versus the fourth quarter of 2010. International revenues were up 15 percent sequentially and up 21 percent versus the same quarter of 2010. Artificial Lift, Drilling Services, Integrated Drilling and Stimulation and Chemicals posted strong sequential growth.
Segment operating income of $619 million improved 44 percent year-over-year and $93 million, or 18 percent sequentially. Segment operating income margins improved to 17 percent. The company's operations delivered 28 percent incremental margins sequentially, with 37 percent incremental margins in North America and 25 percent incremental margins internationally. Internationally, both Latin America and Middle East/North Africa/Asia posted strong profit improvements of $42 million and $27 million, respectively.
A $28 million increase in corporate expenses, research and development and other, net, primarily attributable to higher professional service fees and foreign exchange losses, partially offset our operating improvements.
Subject to the risks regarding forward-looking statements highlighted by the company in this press release and its public filings, the company expects to report fully diluted earnings per share of approximately $0.30 before excluded items in the first quarter of 2012, with seasonal increases in Canada offset by seasonal declines in Russia, the North Sea, Asia Pacific and areas of the central United States. With regard to the entirety of 2012, the company maintains a positive but measured outlook for its North American business and expects modest profit improvement as compared to 2011. Internationally, the company anticipates continued growth and expanding margins in its Latin America region, underpinned by improvements in Argentina, Colombia, Mexico and Venezuela. Eastern Hemisphere is also expected to improve in 2012, with upticks in Europe and Russia, as well as continued recovery in the Middle East / North Africa / Asia Pacific region with positive contributions from new contracts with better terms and pricing and the completion of existing contracts. For 2012, we currently estimate an effective tax rate of approximately 35 percent, although the actual rate may vary.
Revenues for the quarter were $1,698 million, a 34 percent increase over the same quarter in the prior year and up five percent sequentially.
The current quarter's operating income was $382 million, up $119 million from the fourth quarter of 2010, and up $29 million, or 8 percent, compared to the prior quarter. Strong growth and expanding margins in the U.S. contributed to the sequential increase as margins improved to almost 23 percent. The Drilling Services, Artificial Lift, Stimulation and Chemicals and Re-entry and Fishing product lines contributed strong results for the quarter and contributed to our margin growth.
Middle East/North Africa/Asia
Fourth quarter revenues of $675 million were one percent lower than the fourth quarter of 2010 but 18 percent higher than the prior quarter. The decline from the same period in the prior year is attributable to the political unrest in parts of the region, including Libya, Algeria, and Egypt and also due to our deconsolidation of three joint ventures. The sequential increase in revenues was attributable to additional activity in Iraq, Saudi Arabia and Oman.
The current quarter's operating income of $44 million decreased $5 million as compared to the same quarter in the prior year and increased $27 million compared to the third quarter of 2011.
Fourth quarter revenues of $609 million were 15 percent higher than the fourth quarter of 2010 and three percent higher than the prior quarter. The revenue growth over the same quarter of 2010 came from each of the regions with Russia, Kazakhstan and Nigeria as strong performers.
The current quarter's operating income of $82 million was up 27 percent compared to the same quarter in the prior year and down $5 million compared to the prior quarter. The current quarter was negatively impacted by seasonality in Russia.
Fourth quarter revenues of $728 million were 63 percent higher than the fourth quarter of 2010 and up 23 percent compared to the third quarter of 2011. Mexico, Venezuela and Columbia posted strong sequential performances in revenues and margins.
The current quarter's operating income of $112 million increased $60 million as compared to the same quarter in the prior year and increased 60 percent or $42 million from the prior quarter. Sequentially, our Integrated Drilling and Stimulation and Chemicals product lines were the strongest performers.
Change in Net Debt
Net debt for the quarter decreased $112 million, with improvements in operating working capital metrics for accounts receivable and inventory both sequentially and compared to the fourth quarter of 2010.
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