Weatherford International Ltd. (WFT), a leading oilfield services company, reported weaker-than-expected first quarter 2010 recurring earnings of 6 cents per share, compared to the Zacks Consensus Estimate of 9 cents and year-ago profit of 27 cents.
 
Unlike Weatherford, sector leader Halliburton Company (HAL) recently posted first-quarter profit that beat the Zacks Consensus Estimate, primarily helped by strengthening activity in North America.
 
Total revenue for the quarter rose 4% to $2.34 billion from $2.26 billion in the year-ago quarter. Of the total quarterly revenue, North America, Middle East/North Africa/Asia, Europe/West Africa/CIS and Latin America segments accounted for 38%, 24%, 20%, and 18%, respectively.
 
North American revenue increased 6% year over year to $891 million. Sequentially, revenue was up 21%. The sequential improvement was driven by growth in all of the company’s product lines. This segment posted an operating income of $112 million, down 9% year over year and up significantly from the previous quarter.
 
Revenue from Middle East/North Africa/Asia decreased approximately 3% year over year and 5% sequentially to $565 million. Operating income was down 38% year over year and was flat sequentially.
 
Europe/West Africa/CIS revenue increased 23% year over year and decreased 5% sequentially to $455 million. The year-over-year increase in revenue was driven by the contribution from the company’s acquisition of TNK-BP’s oilfield service business last year. However, operating income declined 59% year over year and 28% sequentially.
 
Latin American revenue decreased 9% year over year and 31% sequentially to $428 million, mainly due to lower activity level in Mexico. However, operating income for this segment was $31 million, down 66% from the year-ago quarter and 37% from the previous quarter.
 
As of Mar 31, 2010, the company’s net debt was $6.6 billion, representing a net debt-to-capitalization ratio of 40.4%. Weatherford’s capital expenditures were $231 million during the quarter. This year’s budget is pegged at $1.1 billion.
 
Strong results in North America and Europe/West Africa/CIS segments offset the Latin American weakness in the reported quarter. Along with signs of recovery in North America, the company’s international operations − particularly in Russia and Iraq − look promising in the near term.
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