The year on year financial comparisons occurred in the context of a cyclical decline in Western Hemisphere drilling activity that began in the second half of 2001. The first quarter 2002 rig count fell 28 percent in North America and 11 percent in Latin America since the first quarter of last year. Eastern Hemisphere activity increased 9 percent year on year somewhat moderating the impact of low activity levels in the Western Hemisphere.
On a sequential basis, first quarter 2002 revenue declined 8 percent from the fourth quarter 2001 level. EBITDA was down 11 percent compared to fourth quarter 2001 levels. The decremental EBITDA margin (that is, the change in EBITDA as a percent of the change in revenue) from the fourth quarter of 2001 to the first quarter was 34.6 percent company wide, a significant improvement from the last reporting period. First quarter diluted earnings of $0.36 per share was 29 percent lower than the prior quarter's diluted earnings of $0.51 per share, excluding goodwill amortization net of taxes. These performance comparisons reflect the continuing weakness in the Western Hemisphere, particularly in the United States and Latin America where drilling activity declined 19 percent and 10 percent, respectively. In addition, the current quarter earnings were adversely impacted $0.03 per share by the effect of the economic crises in Argentina and Venezuela on the Artificial Lift and Completion Systems divisions and on our equity earnings in unconsolidated affiliates.
Please note that during the first quarter of 2002 the oil & gas and industrial segments of our 2001 Johnson Screens acquisition were split. The oil & gas segment continues to reside in Completion Systems, while the industrial screen segment is now included in Artificial Lift Systems. This allocation has been reflected in our 2001 Form 10-K.
Drilling & Intervention Services
First quarter revenue was $313.3 million, 10 percent higher than the prior year and 11 percent below the preceding quarter. EBITDA was $102.5 million, 4 percent above the prior year and 9 percent below the preceding quarter. Sequentially, the division's EBITDA decremental margin was 25 percent.
Sequentially, Drilling & Intervention Services' first quarter performance was reflective of the drop in United States and Latin American activity levels, as well as the expected seasonal decline in North Sea activity. In those markets, Drilling & Intervention Services' revenue declined 17 percent in line with a drop of the same magnitude in drilling activity. The revenue decline was moderated by a sequential gain in the Canadian region.
Completion Systems
First quarter revenue of $92.3 million was 25 percent above the prior year and 10 percent below the preceding quarter. EBITDA was $12.6 million, 16 percent higher than the prior year and 19 percent below the preceding quarter, after the reallocation of the Johnson Screen business between Completion Systems and Artificial Lift Systems. Sequentially, the division's EBITDA decremental margin was 29 percent.
Sequentially, Completion Systems performance was affected by geographical trends, including the declines in Western Hemisphere and North Sea activity levels. In addition, softer revenue in the Middle East/North Africa region primarily reflected project timing. Well screen revenue improved due to the full quarter impact of the oil & gas screen business from the Johnson acquisition, which was acquired late in the fourth quarter of 2001.
Artificial Lift
First quarter revenue was $162.6 million, 16 percent above last year and slightly below the preceding quarter. EBITDA of $27.1 million was 19 percent above the prior year and 14 percent below the preceding quarter. Excluding the Johnson industrial screen line, the division's EBITDA decremental margin was 32 percent.
On a sequential basis, Artificial Lift Systems revenue declined due to the continuing low level of oil-related activity in North America and disruption in Latin American markets, particularly in Argentina and Venezuela. That decline was offset by the integration of the Johnson industrial screen business into this division's growing industrial markets segment.
Houston-based Weatherford International, Inc. is one of the largest global providers of innovative mechanical solutions, technology and services for the drilling and production sectors of the oil and gas industry. Weatherford operates in over 100 countries and employs approximately 15,000 people worldwide.
Contact: Don Galletly (713) 693-4148
Lisa Rodriguez (713) 693-4746
This press release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 concerning, among other things,
Weatherford's prospects for its operations, the integration of recent
acquisitions and the successful completion of its corporate restructuring, all
of which are subject to certain risks, uncertainties and assumptions. These
risks and uncertainties, which are more fully described in Weatherford
International, Inc.'s Annual, Quarterly and Current Reports filed with the SEC,
include the impact of oil and natural gas prices and worldwide economic
conditions on drilling activity, the demand for and pricing of Weatherford's
products, domestic and international economic and regulatory conditions and
changes in tax and other laws affecting the proposed restructuring and our
business. Should one or more of these risks or uncertainties materialize, or
should the assumptions prove incorrect, actual results may vary in material
aspects from those currently anticipated.
Weatherford International, Inc.
Consolidated Condensed Statements of Operations
(In 000's, Except Per Share Amounts)
Three Months Ended
March 31,
2002 2001
Net Revenues:
Drilling and Intervention Services $313,349 $284,598
Completion Systems 92,312 74,112
Artificial Lift Systems 162,588 140,509
Compression Services --- 26,939
568,249 526,158
Operating Income (Loss):
Drilling and Intervention Services 64,939 70,355
Completion Systems 6,198 3,843
Artificial Lift Systems 21,526 15,906
Compression Services --- (597)
Equity in Earnings 6,853 2,758
Corporate Expenses (9,280) (9,719)
90,236 82,546
Other Income (Expense):
Other, Net (215) 763
Interest Expense (22,083) (15,291)
Income Before Income Taxes 67,938 68,018
Provision for Income Taxes (23,098) (24,486)
Income Before Minority Interest 44,840 43,532
Minority Interest, Net of Taxes 379 (22)
Net Income $45,219 $43,510
Earnings Per Share:
Basic $0.38 $0.39
Diluted (A) $0.36 $0.37
Weighted Average Shares Outstanding:
Basic 119,161 110,541
Diluted 133,807 124,850
Depreciation and Amortization:
Drilling and Intervention Services $37,529 $27,749
Completion Systems 6,436 7,063
Artificial Lift Systems 5,546 6,873
Compression Services --- 4,184
Other 523 1,299
$50,034 $47,168
(A) Diluted earnings per share for the three months ended March 31, 2001
excluding goodwill amortization, net of taxes, was $0.44.
SOURCE Weatherford International, Inc.
CONTACT: Don Galletly, +1-713-693-4148, or Lisa Rodriguez,
+1-713-693-4746, both of Weatherford International, Inc.
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