Weatherford Sees Improvements in 1Q Financial Results
Despite the challenging environment, Weatherford International plc's preliminary financial results improved during the first quarter due to operational and cost reduction initiatives.
The company's preliminary financial results for the first quarter of 2020 are:
- Revenues in the range of $1,190 to $1,210 million;
- Net loss in the range of $185 to $210 million;
- Cash flow from operations of $5 to $25 million and capital expenditures of $30 to $40 million;
- Free cash flow in the range of negative $15 to negative $25 million
“The impact of the COVID-19 pandemic and recent actions by certain producing nations have had an unprecedented disruption on the supply/demand equation for oil, resulting in a precipitous decline in commodity prices and substantial reductions to the capital spending plans of exploration and production companies,” the company said in a written statement.
In response, Weatherford bolstered its cost reduction initiatives with a number of steps, including:
- Temporary pay reductions of 20% for management and to the board’s annual cash retainer;
- Headcount reductions across North American operations and the global support structure of 38% and 25%, respectively;
- Furloughs and pay cuts for remaining employees in the U.S. and some international locations;
- Reducing planned expenditures by 50% in 2020 versus 2019 levels; and
- Consolidating geographic and product line structures
“Currently, Weatherford has adequate liquidity and is compliant with its financial covenants,” the company said in a written statement. “However, the emerging operating environment has led to the inability to predict the depth and length of the industry's weakness. In this backdrop, the company's debt levels are too high. Management and the board are evaluating options to improve liquidity and address the company's long-term capital structure.”
Separately, the board determined that delisting from the NYSE is in the best interest of the company. It plans to withdraw its appeal to the delisting proceedings, and Weatherford will continue to trade on the OTC Pink Marketplace under the ticker symbol "WFTLF".
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