Weatherford International Ltd (WFT), a leading oilfield services company, reported a significantly weaker-than-expected fourth-quarter 2009 recurring earnings of 2 cents per diluted share, compared to the Zacks Consensus Estimate of 12 cents and year-ago earnings of 53 cents. Including one-time charges, the loss was 4 cents per share. Earnings for full year 2009 were 50 cents per share versus $2.00 in 2008.
Unlike Weatherford, sector leaders Schlumberger Ltd (SLB) and Halliburton Company (HAL) both posted fourth-quarter profits that beat the Zacks Consensus Estimates.
This sharp quarterly decline in earnings was mainly due to a global slowdown in drilling activity. But the biggest culprit was the North American drilling scenario, which witnessed a 40% lower rig count than the year-earlier period.
Total revenue for the quarter fell 8% to $2.43 billion from $2.63 billion in the year-ago quarter. For full year 2009, revenue also fell 8% to $8.83 billion from $9.60 billion in 2008.
Of the total quarterly revenue, North America, Latin America, Middle East/North Africa/Asia and Europe/West Africa/CIS segments accounted for 30%, 26%, 24%, and 20%, respectively.
North American revenue decreased more than 37% year-over-year to $736 million on the back of a 40% lower rig count. Sequentially, revenue was up 19%, with a 20% increase in rig count. The sequential improvement was driven by growth in all of the company’s product lines except the Pipeline segment. This segment posted an operating income of $42 million, compared to $296 million in the year-earlier quarter and $34 million in the previous quarter.
Latin American revenue increased 59% year-over-year and 18% sequentially to $618 million. This segment experienced significant improvement sequentially in Mexico, Brazil, Columbia and Ecuador. However, operating income was down 44% from the year-ago quarter and 9% from the previous quarter.
Revenue from Middle East/North Africa/Asia decreased approximately 12% year-over-year and 1% sequentially to $593 million. Operating income was down 49% year-over-year and 19% sequentially. Europe/West Africa/CIS revenue increased 22% year-over-year and 18% sequentially to $478 million. However, operating income declined 52% year-over-year and 41% sequentially.
Though Weatherford’s fourth-quarter earnings were hurt by lower drilling activity compared to the year-ago period, a sequential improvement is noticeable. We view this year as one of transition with improving hydrocarbon demand and industry fundamentals.
We currently have a Neutral recommendation for Weatherford shares.
Read the full analyst report on “WFT”
Read the full analyst report on “SLB”
Read the full analyst report on “HAL”
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