HOUSTON, July 28, 2005 /PRNewswire-FirstCall via COMTEX/ -- Weatherford International Ltd. (NYSE: WFT) today reported second quarter 2005 net income of $94.7 million from continuing operations or $0.64 per diluted share. The company continues to post record earnings as second quarter diluted earnings per share from continuing operations improved 8.5 percent from first quarter diluted earnings per share before non-recurring charges and 60 percent from second quarter 2004 diluted earnings per share of $0.40 which excluded the gain relating to the company's sale of Universal Compression Holdings, Inc.'s common stock. The annual improvement of 60 percent was propelled by our commitment to infrastructure investments and technologies.
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Revenues for the second quarter were $937.3 million and represent the highest revenue levels in company history. Second quarter revenues improved 9 percent sequentially despite a severe seasonal downturn in the Canadian market and 26 percent over the $742.2 million reported last year. The Eastern Hemisphere led the growth with a 20 percent increase over the prior quarter and a 28 percent increase over the second quarter 2004. North American revenues grew marginally over the prior quarter, 4 percent, as strong improvements in the U.S. were largely offset by the 23 percent decline in Canadian revenues due to spring break-up.
Operating income was $139.0 million for the quarter, 7 percent higher than the first quarter before non-recurring charges and over 50 percent higher than the same quarter in the prior year.
In the first six months of 2005, revenues were $1.8 billion and income from continuing operations before charges was $181.2 million or $1.22 per diluted share. In 2004, reported revenues for the first six months were $1.5 billion, and income from continuing operations was $109.3 million or $0.78 per diluted share excluding the gain on sale of Universal common stock.
Drilling Services
Revenues for the quarter reached record levels of $533.4 million, 10 percent above the prior quarter and 26 percent above the same quarter in the prior year. Geographically, all regions, excluding Canada, posted sequential improvements greater than 10 percent. The North Sea/Middle East and the U.S. led the improvements with a 22 percent and 16 percent increase, respectively. The strong performance in these regions more than offset the 40 percent decline in Canadian revenues.
Operating income of $121.0 million was 8 percent higher than the preceding quarter and 39 percent higher than the same quarter in the prior year. Furthermore, excluding Canada, operating income incremental margins improved 31 percent. Improvements were due to strong performances by our well construction and intervention services product lines.
Production Systems
Second quarter revenues of $403.9 million were led by a strong performance in the Eastern Hemisphere and the U.S. Revenue growth in the Eastern Hemisphere was 26 percent sequentially and 30 percent over the same period in 2004 while growth in the U.S. was 18 percent sequentially and 45 percent over the same period last year. All product lines posted increased revenues over the prior quarter.
The current quarter's operating income of $52.6 million improved 3 percent above the preceding quarter despite the negative impact of the Canadian seasonal decline. Operating income improved 68 percent as compared to the same quarter in the prior year and operating margins improved over 310 basis points.
Research and Development
The company's Research and Development expenditures were $23.9 million in the second quarter. Expenditures increased $3.9 million as compared to the same quarter in the prior year due to the continued commitment to raise the technology content of products and services.
Corporate Expenses
Corporate Expenses were relatively flat sequentially and increased $5.2 million as compared to the same period last year due primarily to corporate governance compliance and employee stock-based compensation expense.
Equity in Earnings of Unconsolidated Affiliates
Equity in Earnings of Unconsolidated Affiliates were $6.6 million for the second quarter as compared $4.2 million excluding charges in the prior quarter and $6.0 million for the second quarter 2004. The sequential increase is due to higher earnings by Universal Compression Holdings, Inc.
Acquisition of Precision
The acquisition of Precision Drilling Corporation's Energy Services and International Drilling divisions, announced in June 2005, is expected to close in late August 2005.
Redemption of Zero Coupon Convertible Senior Debentures
The company announced this morning that it is calling for redemption on August 29, 2005 of all its outstanding Zero Coupon Convertible Senior Debentures due June 30, 2020. The aggregate redemption price is expected to be approximately $578 million. The Company intends to fund the redemption of the Debentures from cash on hand and borrowings under its revolving credit agreement. Holders will have the right to convert their Debenture into the Company's common shares prior to the redemption date.
Conference Call
The company will host a conference call with financial analysts on Thursday, July 28, 2005 at 8:00 a.m. (CDT). The purpose of the conference call is to discuss results for the company's second quarter ended June 30, 2005. The company invites investors to listen to a play back of the conference call at the company's website, http://www.weatherford.com in the "investor relations" section. Further, the "investor relations/financial information" section of the company's website includes a disclosure and reconciliation of non-GAAP financial measures used in this release and may be used periodically by management when discussing the company's financial results with investors and analysts.
Weatherford 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 19,000 people worldwide.
Contact: Lisa W. Rodriguez
Chief Financial Officer
(713) 693-4746
Andrew P. Becnel
Vice President - Finance
(713) 693-4136
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 and the successful integration of the plan of restructuring, all of which are subject to certain risks, uncertainties and assumptions. These risks and uncertainties, which are more fully described in Weatherford International Ltd.'s reports and registration statements 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 and services, domestic and international economic and regulatory conditions and changes in tax and other laws affecting 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 Ltd.
Consolidated Condensed Statements of Income
(In 000's, Except Per Share Amounts)
Three Months Six Months
Ended June 30, Ended June 30,
2005 2004 2005 2004
Net Revenues:
Drilling Services $533,422 $424,912 $1,020,066 $828,631
Production Systems 403,873 317,276 774,935 626,197
937,295 742,188 1,795,001 1,454,828
Operating Income (Expense):
Drilling Services 121,036 86,950 233,275 163,646
Production Systems 52,599 31,254 103,847 67,536
Research and Development (23,903) (20,021) (44,922) (39,274)
Equity in Earnings 6,578 6,025 10,779 11,278
Non-recurring Expense - - (6,762) -
Corporate Expenses (17,341) (12,186) (34,230) (23,554)
138,969 92,022 261,987 179,632
Other Income (Expense):
Gain on Sale of Universal
Common Stock - 25,280 - 25,280
Other, Net 3,272 (1,251) 2,693 (623)
Interest Expense, Net (13,379) (15,054) (27,037) (30,728)
Income from Continuing
Operations Before Income Taxes 128,862 100,997 237,643 173,561
Provision for Income Taxes (34,137) (19,965) (62,483) (39,029)
Income from Continuing
Operations 94,725 81,032 175,160 134,532
Income (Loss) from Discontinued
Operation, Net of Taxes 463 (7,143) 624 (8,038)
Net Income $95,188 $73,889 $175,784 $126,494
Basic Earnings Per Share:
Income from Continuing
Operations $0.68 $0.61 $1.27 $1.01
Income (Loss) from
Discontinued Operation 0.01 (0.05) 0.00 (0.06)
Net Income $0.69 $0.56 $1.27 $0.95
Diluted Earnings Per Share:
Income from Continuing
Operations $0.64 $0.57 $1.19 $0.95
Income (Loss) from
Discontinued Operation 0.00 (0.05) 0.00 (0.05)
Net Income $0.64 $0.52 $1.19 $0.90
Weighted Average Shares
Outstanding:
Basic 138,936 133,107 138,375 132,710
Diluted 153,513 147,597 152,792 147,273
Weatherford International Ltd.
Supplemental Information
(In 000's)
Three Months Six Months
Ended June 30, Ended June 30,
2005 2004 2005 2004
Geographic Revenues:
Eastern Hemisphere $357,920 $280,293 $656,267 $543,074
United States 372,247 281,239 689,967 521,295
Canada 124,459 108,670 285,724 251,719
Latin America 82,669 71,986 163,043 138,740
$937,295 $742,188 $1,795,001 $1,454,828
Depreciation and Amortization:
Drilling Services $49,770 $45,046 $99,440 $89,935
Production Systems 18,816 16,297 37,558 32,072
Research and Development 1,168 1,131 2,310 2,308
Other 563 628 1,131 1,212
$70,317 $63,102 $140,439 $125,527
Research and Development:
Drilling Services $11,714 $9,815 $21,519 $19,629
Production Systems 12,189 10,206 23,403 19,645
$23,903 $20,021 $44,922 $39,274
Selected Balance Sheet Information
(In 000's)
June 30, December 31,
2005 2004
Cash $305,671 $317,439
Accounts Receivable, Net 809,394 742,291
Inventories 764,676 679,607
Accounts Payable 270,149 279,763
Short-Term Borrowings and Long-Term
Debt 1,441,978 1,426,666
Shareholders' Equity 3,540,801 3,313,389
SOURCE Weatherford International Ltd.
Lisa W. Rodriguez, Chief Financial Officer, +1-713-693-4746, or Andrew P. Becnel, Vice President - Finance, +1-713-693-4136, both of Weatherford International Ltd.