WEATHERFORD INTERNATIONAL, LTD. (SWITZERLAND) (WFT) filed Quarterly Report for the period ended 2009-09-30.
Weatherford International is one of the world's leading providers ofequipment and services used for the drilling completion and production of oil and natural gas wells. Its operations are conducted in numerous countries and it has service and sales locations in substantially all of the oil and natural gas producing regions in the world. The company's products and services are divided into the following four principal operating divisions: Drilling and Intervention Services; Completion Systems; Artificial Lift Systems; and Compression Services. Weatherford International, Ltd. (switzerland) has a market cap of $12.92 billion; its shares were traded at around $17.53 with a P/E ratio of 17.02 and P/S ratio of 1.35.
Highlight of Business Operations:
Oil prices increased during the first nine months of 2009, ranging from a low of $33.98 per barrel in mid-February to a high of $74.37 per barrel in late August. Natural gas prices decreased for most of the first three quarters of 2009 but started to rally late in September, ranging from a high of $6.07 MM/BTU in early January to a low of $2.51 MM/BTU early in September. Factors influencing oil and natural gas prices during the period include hydrocarbon inventory levels, realized and expected economic growth, realized and expected levels of hydrocarbon demand, levels of spare production capacity within the Organization of Petroleum Exporting Countries (“OPEC”), weather and geopolitical uncertainty.
Consolidated operating income decreased $385 million, or 72%, in the third quarter of 2009 as compared to the third quarter of 2008. Our operating segments contributed $370 million of this decrease. The remainder of this decrease is primarily due to an increase in corporate expenditures of $14 million. The increase in corporate expenses was primarily attributable to higher employee compensation costs and settlement of a legal dispute incurred during the quarter ended September 30, 2009.
During the first nine months of 2009, consolidated operating income decreased $833 million, or 58%, as compared to the first nine months of 2008. Our operating segments contributed $753 million of this decrease. In addition, exit and restructuring charges during the first nine months of 2009 increased $50 million and corporate expenditure increased $25 million compared to the first nine months of 2008. The increase in corporate expenses was primarily attributable to higher employee compensation costs, professional fees and costs related to acquisitions (which were capitalized in 2008 and expensed in 2009 due to the adoption of new accounting guidance related to business combinations) and settlement of a legal dispute.
Exit and restructuring charges for the nine months of 2009 includes (i) $36 million for legal and professional fees incurred in connection with our on-going investigations, (ii) $34 million for severance and facility closure costs and (iii) $4 million for unusable assets and cost accruals in certain sanctioned countries. Exit and restructuring charges during the first nine months of 2008 include $57 million for costs incurred in connection with our withdrawal from sanctioned countries, $15 million for severance costs incurred associated with reorganization activities and $33 million for legal and professional fees incurred in connection with our on-going investigations. These charges were offset by an $81 million gain recognized in the second quarter of 2008 as a result of selling our 50% interest in a subsidiary we control to Qatar Petroleum for cash consideration of $113 million.
Interest expense, net increased $30 million, or 49%, and $99 million, or 56% during the three and nine months ended September 30, 2009 as compared to the same periods of the prior year, respectively. We issued $1.5 billion in senior notes in March 2008 and an additional $1.25 billion of senior notes in January 2009. The incremental borrowings added during the comparable periods were used to fund capital expenditures and to fund acquisitions.
In January 2009, we completed a $1.25 billion long-term debt offering comprised of (i) $1 billion of 9.625% senior notes due in 2019 (“9.625% Senior Notes”) and (ii) $250 million of 9.875% senior notes due in 2039 (“9.875% Senior Notes”). Net proceeds of $1.23 billion were used to repay short-term borrowings with maturities of less than one month and for general corporate purposes. Interest on these notes is due semi-annually on March 1 and September 1 of each year.
WFT is in the portfolios of George Soros of Soros Fund Management LLC.
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