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Weatherford International’s Value Drivers in 3Q17

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Weatherford International’s revenue

Revenues from Weatherford International’s (WFT) North America region saw robust revenue growth of ~20% from 3Q16 to 3Q17. On the other hand, its Latin America region declined the most by 10.2% during the same period. In comparison, Schlumberger’s (SLB) 3Q17 North America revenues rose 53% over 3Q16. You can read more about SLB in Market Realist’s Schlumberger’s Outlook and Fundamentals in 4Q17. WFT makes up 0.22% of the iShares US Energy (IYE). IYE has fallen 11% in the past year compared to a 39% fall for WFT stock during the same period.

Weatherford International’s operating income

Positive value drivers in 3Q17

  • Strong rise in revenues in WFT’s well construction, completions, and artificial lift product lines
  • Lower cost structure in the United States and increased activity levels in both the United States and Canada
  • Benefits from cost reductions in Sub-Saharan Africa
  • Recovery from the Canadian spring break-up
  • Increase in completions-related work in Russia
  • Favorable product mix in the North Sea

Negative value drivers in 3Q17

  • Decline in deeper-water offshore work activity in Sub-Saharan Africa
  • Operating profit decline due to difficult situation in Venezuela
  • Loss of non-repeating product sales in Brazil

Next, we’ll see how US upstream companies’ capex (capital expenditure) has affected WFT’s operating margin. We’ll also see how dependent Weatherford is on the US rig count.

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