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Factors that Affected Weatherford’s 4Q17 Performance

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Weatherford International’s geographic performance

Revenues from Weatherford International’s (WFT) Western Hemisphere increased 3.1% from 4Q16 to 4Q17. WFT’s Eastern Hemisphere region saw robust revenue growth of ~9.0% during the same period.

The Western Hemisphere segment represents the previous North America and Latin America segments, while the Eastern Hemisphere segment represents the prior MENA/Asia-Pacific segment and Europe/SSA/Russia segment as well as land drilling rig operations.

WFT’s Western Hemisphere region’s operating loss decreased to $35.0 million in 4Q17 compared to its $74.0 million operating loss in 4Q16. However, WFT’s operating loss in the Eastern Hemisphere deepened further to $49.0 million from its $42.0 million operating loss in 4Q16.

WFT comprises 3.1% of the SPDR S&P Oil & Gas Equipment & Services ETF (XES). XES declined 26.0% in the past year compared to a 34.0% decrease in WFT’s stock price during the same period.

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Weatherford’s segment-wise performance

All of WFT’s Product and Service Line segments saw revenue growth from 4Q16 to 4Q17. WFT’s Completion segment saw the highest revenue growth of 10.8%, followed by Drilling and Evaluation (increase of 7.1%), Well Construction (increase of 5.9%, and Production (increase of 1.5%.

Positive factors that affected Weatherford’s 4Q17 performance

  • increased activity from contract deliveries and sales in the Eastern Hemisphere
  • recovery of upstream activity levels in North America
  • growth in Completions activity in North America
  • realization of savings from cost reduction measures
  • market share gains in land markets in the Middle East, Russia, and Continental Europe

Negative factors that affected Weatherford’s 4Q17 performance

  • lower upstream activity in Venezuela
  • the adverse effect of a change in accounting for revenue with WFT’s customers in Venezuela
  • lower margins on year-end product sales out of existing inventory
  • continued weakness in offshore markets in the Eastern Hemisphere

Next, we’ll discuss Weatherford International’s returns.

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