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Weatherford (WFT) Posts Narrower-than-Expected Loss in Q3

Leading oilfield services company Weatherford International Ltd. 's WFT third-quarter 2015 adjusted loss of 5 cents per share was narrower than the Zacks Consensus Estimate of a loss of 11 cents. The results, however, compared unfavorably with the year-earlier adjusted earnings of 32 cents per share.

Total revenue of $2,237.0 million, on the other hand, came in below the Zacks Consensus Estimate of $2,322.0 million. The reported figure also decreased significantly from $3,877.0 million in the year-ago period.

Operational Performance

North American revenues for the third quarter were $824 million, up 2% sequentially and 55% from the comparable quarter a year ago. Operating loss for the quarter was $54 million versus operating income of $294 million in the year-ago quarter.

Middle East/North Africa/Asia recorded revenues of $445 million, down 14% sequentially and 30% year over year. The reported quarter's operating income of $42 million was down 24% sequentially and 47% from the prior-year quarter.

Europe/West Africa/FSU posted revenues of $361 million, down 14% sequentially and down 35% from the year-earlier quarter. The quarter's operating income of $43 million decreased 36% sequentially and 65% year over year.

Latin America revenues of $421 million were down 9% sequentially and 29% year over year. Third-quarter operating income of $73 million was down 13% sequentially and 24% year over year.

Liquidity

As of Sep 30, 2015, Weatherford had $519 million in cash and cash equivalents. The company's long-term debt was $6,020 million. Weatherford spent approximately $105 million in capital expenditures during the reported quarter.

Guidance

As a result of the continuing weakness in the North American market conditions, Weatherford plans to further reduce its expenses. The company cut 11,000 jobs during the third quarter and intends to lay off another 3,000 personnel, mainly in the U.S., going forward. Weatherford also shut five of its manufacturing and service facilities along with 70 operating facilities across North America during the first nine months of 2015. The closure of another 20 facilities by the end of the year is also on the agenda. These measures are expected to help the company overcome the impact of the downturn as well as take advantage of the opportunity to develop a leaner structure and a tighter organization.

During the fourth quarter, Weatherford expects positive free cash flow from a reduction in working capital balances and efficiency in capital expenditure spending. The company has further reduced its capital expenditure guidance for 2015 by $100 million to $650 million, which is 55% lower than the 2014 level. Based on its cost-reduction efforts, the company estimates annualized savings to exceed $800 million.

Zacks Rank

Weatherford currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks from the same space are Matrix Service Company MTRX , Natural Gas Services Group Inc. NGS and McDermott International Inc. MDR . While Matrix and Natural Gas Services sport a Zacks Rank #1 (Strong Buy), McDermott holds a Zacks Rank #2 (Buy).

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WEATHERFORD INT (WFT): Free Stock Analysis Report

MATRIX SERVICE (MTRX): Free Stock Analysis Report

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NATURAL GAS SVC (NGS): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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