Tuesday, January 25, 2011

Weatherford International Ltd. (NYSE: WFT): Q4 Earnings Preview 2010

Weatherford International Ltd. (NYSE: WFT) is scheduled to release its fourth-quarter earnings before the opening bell on Tuesday, January 25, 2011. Analysts, on average, expect the company to report earnings of 23 cents per share on revenue of $2.73 billion. In the year ago period, the company reported earnings of 2 cents per share on revenue of $2.43 billion.

Weatherford International Ltd. provides equipment and services used in the drilling, evaluation, completion, production, and intervention of oil and natural gas wells to independent oil and natural gas producing companies worldwide. It conducts operations in approximately 100 countries and has service and sales locations in the oil and natural gas producing regions in the world. The Company’s product offerings are grouped into ten service lines: drilling services; artificial lift systems; well construction; completion systems; integrated drilling; drilling tools, re-entry and fishing; stimulation and chemicals services; wireline and evaluation services, and pipeline and specialty services. Its geographic reporting segments include North America, Latin America, Europe/West Africa/ the Former Soviet Union (FSU) and Middle East/North Africa/Asia.

In the preceding third quarter, the Geneva, Switzerland-based company's net income was $144.8 million or $0.19 per share, compared to $77.4 million or $0.11 per share in the year-ago quarter. Excluding items, non-GAAP net income for the third quarter was $132.4 million or $0.18 per share, compared to $65.3 million or $0.09 per share in the prior year quarter. Revenue for the third quarter rose 18% to $2.53 billion from $2.15 billion in the same quarter last year. Analysts, on average, expected the company to report earnings of $0.17 per share on revenue of $2.62 billion.

At its last earnings call in October, the company said that it expects earnings, excluding items, to be $0.23 per share for the fourth quarter and $1.30 per share for the fiscal year 2011. A return to improved market conditions in Mexico and the Middle East coupled with continued strength in North America, South America and Russia should drive improved results through 2011, the company noted.

Though prices are still far from the historic levels of 2008, oil prices continue to move up (and stay up). As they do, oil companies like Exxon, Shell, Chevron, and BP all have greater incentive to increase production; price shifts have been a major driver of demand for exploration and drilling, and, thus, Weatherford's business.  When oil prices rise, demand for oilfield services increases to match the desire for more reserves. 

Weatherford offers its services to a number of major, national, and independent oil and gas companies. Besides Petroleos Mexicanos (“Pemex”) accounting for roughly 13% of Weartherford's 2009 revenues, no other individual customer accounts for more than 10% of the company's consolidated revenues.

During the quarter in review, the company's shares began trading on the SIX Swiss Exchange under the stock ticker 'WFT'.

In terms of stock performance, Weatherford shares have gained nearly 23 percent since the beginning of the year.

Full Disclosure: None.
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