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What Drove Weatherford’s 1Q18 Performance?

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Weatherford International’s performance

Weatherford International (WFT) released its 1Q18 financial results yesterday. Read about WFT’s earnings versus analysts’ estimates in Market Realist’s Why Weatherford’s 1Q18 Earnings Beat Estimates. Revenues from Weatherford International’s Western Hemisphere increased 3.1% from 1Q17 to 1Q18. WFT’s Eastern Hemisphere region saw more modest revenue growth (a 2.1% rise). The Western Hemisphere segment represents WFT’s prior North America and Latin America segments, while the Eastern Hemisphere segment represents the prior MENA (the Middle East and North Africa)/Asia Pacific segment and Europe/SSA (sub-Saharan Africa)/Russia segment.

WFT’s Western Hemisphere generated $24 million in profit in 1Q18, compared to a $30 million operating loss a year earlier. Similarly, WFT’s 1Q17 operating loss in the Eastern Hemisphere became $16 million in operating profit in 1Q18.

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Weatherford’s segments’ performance

WFT’s Product and Service Line segments saw mixed results in 1Q18. The Production segment saw the highest year-over-year revenue growth (an 11.7% rise), followed by Well Construction (up 3.4%). On the other hand, Drilling and Evaluation (1.6% down) and Completion (3.3% down) witnessed lower revenues in 1Q18 compared to a year ago.

Positive Factors that affected WFT’s 1Q18 performance

  • increased upstream activity in the United States, Argentina, and Mexico in the Western Hemisphere
  • increased upstream activity in Kuwait, Iraq, Russia, and Saudi Arabia in the Eastern Hemisphere
  • improved margins, benefiting from a larger share of higher-priced products
  • realization of savings from cost reduction measures

Negative factors that affected WFT’s 1Q18 performance

  • the adverse effect of a change in revenue accounting with WFT’s customers in Venezuela
  • depressed offshore markets in the North Sea, West Africa, and Asia

Next in this series, we’ll discuss Weatherford International’s returns.

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