Leading oilfield services company,
Weatherford International Ltd.
) first-quarter 2013 adjusted earnings of 15 cents per share came
in at par with the Zacks Consensus Estimate. The results also
dropped substantially from the year-earlier adjusted earnings of
25 cents. The earnings declined mainly due to the weakness in
North American earnings.
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The total revenue in the first quarter increased by nearly 7%
year over year to $3,837.0 million from $3,591 million in
prior-year quarter but missed the Zacks Consensus Estimate of
revenues decreased 3.5% year over year to $1,692.0 million. The
relative decline in the U.S. land rig count compared to the first
quarter of 2012 as well as oversupply of hydraulic fracturing
capacity resulted in the loss. The Stimulation and Chemicals
segment was also weak, with operating income of $224.0 million
compared with $358.0 million in the year-ago quarter.
Middle East/North Africa/Asia
revenues climbed 31.9% year over year to $785 million. The
segment's operating income plunged 15.1% year over year to $45
million. The decline is attributable to typical seasonal effects
posted revenues of $633.0 million, up 10.9% year over year. The
segment's operating income dropped marginally by 1.5% year over
year to $65.0 million.
revenues climbed 8.3% year over year to $727.0 million. Operating
income from this segment rose to $98.0 million from the year-ago
level of $83.0 million.
As of Mar 31, 2012, Weatherford had $286 million in cash and cash
equivalents and long-term debt was $7,032 million. Weatherford
spent $400 million in capital expenditures during the quarter.
With respect to the second half of 2013, the company maintains a
neutral outlook for its North American business and expects
moderate growth in revenues and operating income.
Weatherford foresees sustained growth and expanding margins in
its Latin America region, supported by improvements in Argentina
The company also expects improvements in the Eastern Hemisphere
in 2013, with upside in Europe, Sub-Saharan Africa and Russia, as
well as stronger activity levels in the Middle East, North Africa
The annual effective tax rate in 2013 is expected to be about
We remain optimistic on Weatherford's operational and financial
leverage to international growth in 2013. However, Weatherford's
debt-heavy balance sheet, weak free cash flow and competition
from larger peers such as
) are causes of concern.
Weatherford holds a Zacks Rank #3 (Hold). However, there are
other stocks in the oil and gas sector -
Newpark Resources Inc.
EPL Oil & Gas, Inc.
) - which hold a Zacks Rank #1 (Strong Buy) and are expected to