Weatherford Announces First-Quarter 2021 Results

HOUSTON, May 5, 2021 /PRNewswire/ -- Weatherford International plc (OTC Pink: WFTLF) ("Weatherford" or the "Company") announced today its results for the first quarter of 2021.

Revenues for the first quarter of 2021 were $832 million, a decline of 1% sequentially and 32% year-on-year.  Reported operating loss was $13 million in the first quarter of 2021, compared to an operating loss of $107 million in the fourth quarter of 2020 and an operating loss of $822 million in the first quarter of 2020. The Company's first-quarter 2021 net loss was $116 million, compared to a net loss of $200 million in the fourth quarter of 2020 and a net loss of $966 million in the first quarter of 2020. First-quarter 2021 cash flows provided by operations were $74 million, compared to cash flows provided by operations of $22 million in the fourth quarter of 2020 and cash flows provided by operations of $30 million in the first quarter of 2020. Capital expenditures were $15 million in the first quarter of 2021, compared to $54 million in the fourth quarter of 2020 and $38 million in the first quarter of 2020.

• First-quarter 2021
• Adjusted EBITDA ^[1] of $102 million increased 4% sequentially and declined 43% year-over-year
• Unlevered free cash flow ^[1] of $94 million was essentially unchanged sequentially and increased $94 million year-over-year
• Free cash flow of $70 million improved by $93 million sequentially and $72 million year-on-year

Girish Saligram, President and Chief Executive Officer, commented, "I am pleased that we delivered favorable operational performance by accomplishing another quarter of double-digit adjusted EBITDA margins and generating free cash flow. We continued to build on our core focus areas by driving improvements in our profitability in North America, leveraging our portfolio to improve profitability in key product lines, and improving our liquidity position."

"Our results from the first quarter of 2021 clearly demonstrate we are making significant progress in harnessing growth opportunities through commercial traction of new technologies, expanding into new markets by leveraging adjacent product lines in targeted geographies, and driving synergies from cross-product line solutions. As an example, in our Tubular Running Services product line, we had a commercial Vero^® operation in each of our geographies in the first quarter, which marks a major milestone in the commercial traction of this technology. At the confluence of these growth levers lies our confidence in our people, our technologies, and our firm resolve to exceed our customers' expectations."

"We exited the first quarter of 2021 with a strong liquidity position by generating $70 million of positive free cash flow, an improvement of $93 million sequentially and $72 million year-on-year. This achievement resulted from  improved operating performance, disciplined capital allocation and expenditures, and reduced working capital driven by continued strength in accounts receivable collections and inventory rationalization."

"Lastly, I am also pleased to share that we recently took an essential step for the Company to fully return to the public markets by filing our Form 10 Registration Statement with the United States Securities and Exchange Commission. I believe that listing on the NASDAQ stock exchange will enhance long-term shareholder value by improving the Company's visibility, expanding liquidity in our ordinary shares, and providing a broader institutional investor base the opportunity to invest in the new Weatherford. Relisting our shares on the NASDAQ stock exchange has been a goal of the Company's since completing our financial restructuring. I am extremely proud that we are now in a position to meet this commitment, and this would not have been possible without the hard work and dedication of our employees."

Notes:
^[1] EBITDA represents income before income tax, depreciation and amortization expense. Adjusted EBITDA excludes, among other items, impairments of long-lived assets and goodwill, restructuring expense, stock-based compensation expense, as well as write-offs of property plant and equipment, right-of-use assets, and inventory. Free cash flow is calculated as cash flows provided by (used in) operating activities, less capital expenditures plus proceeds from the disposition of assets. Unlevered free cash flow is calculated as free cash flow plus cash paid for interest. Adjusted EBITDA, free cash flow and unlevered free cash flow are non-GAAP measures. Each measure is defined and reconciled to the most directly comparable GAAP measure in the tables below.
^[2] Includes cash and cash equivalents and restricted cash.

Operational Highlights

• During the first quarter, several customers recognized Weatherford operating teams for our outstanding commitment to QHSE. An IOC bestowed the "Outstanding Operational Excellence" award on the tubular running services crew in Tengiz, Kazakhstan. A major NOC in the Middle East recognized Weatherford for delivering 20 years of liner-hanger services without lost time incidents.
• An operator in Indonesia chose Weatherford to accelerate its digital transformation by deploying the ForeSite^® production optimization platform on a 100 plus well trial. After analyzing the first batch of wells, the Weatherford team advised on optimization opportunities that resulted in a 14% uplift. The ForeSite platform also improved uptime across the wells with an average reduction of 40% in lost-production opportunities. The remote monitoring capabilities of the platform have reduced driving and associated HSE risks while also delivering a significant improvement in personnel utilization and response time. This trial has set the stage for the Company to expand its production optimization and remote monitoring platform in the region.
• Weatherford has introduced the Magnus^® rotary steerable system in the North Sea market with excellent outcomes, which further demonstrates its commercial traction. A major operator in the UK decided to replace technology from the incumbent, a major competitor, to drill re-entries in an existing field and boost production. The Magnus system not only surpassed the technical limit set by the customer based on the incumbent's historical performance in the very first deployment, but also drilled the first three re-entry wells an average of 33% faster than planned. This success has led to contracts with two additional customers in the North Sea.
• In Eastern Europe, Weatherford deployed its Focused Magnetic Resonance tool openhole logging service in a major carbonate pay zone, which marks the introduction of this technology in Europe. By executing the full scope of its service delivery cycle, the Company delivered performance that exceeded the customer's expectations, which resulted in an award of six additional wells through the course of 2021 and further awards from two more customers.
• In Central Asia, Weatherford completed the fourth installation of ESS^® expandable sand screens, which marks the second remotely supervised ESS installation in the country. This expansion into a new market shows the increased traction of ESS technology, a viable alternative to the more expensive gravel-pack option.
• In conjunction with Victus^™ intelligent managed pressure drilling, or MPD, technology, Weatherford Drilling Services achieved another record by drilling the longest horizontal well in the history of the field in the Middle East. The 4,500-feet-long horizontal section was geosteered through a 5-feet-thick payzone while retaining 100% of the section in the target formation. To sidetrack this well, which was shut in due to prior drilling challenges, the Weatherford team analyzed the well data and proposed combining its MPD solution with its field-proven rotary steerable system and QuickCut^™ re-entry whipstock system. After setting the whipstock and milling a 6-inch window, the team sidetracked the original hole, landed into the formation with a 91-degree inclination, and drilled the lateral without lost-time incidents.

Liquidity 

The Company maintained its disciplined focus on liquidity during the first quarter of 2021. Unlevered free cash flow of $94 million in the first quarter of 2021 improved by $94 million versus the first quarter of 2020, despite a 43% reduction in adjusted EBITDA. First-quarter 2021 free cash flow of $70 million improved by $93 million sequentially and $72 million year-on-year due to the Company's efforts to control costs and reduce net working capital and capital expenditures. Total cash of approximately $1.3 billion as of March 31, 2021, was up $58 million from the prior quarter.

Results by Operating Segment

Western Hemisphere

First-quarter 2021 Western Hemisphere revenues of $390 million increased 5% sequentially and decreased 34% year-on-year.

In North America, first-quarter 2021 revenues of $214 million increased by 6% sequentially primarily due to increased Drilling, Evaluation, and Intervention services in the United States and Canada and seasonal activity increases in Canada, partially offset by seasonally lower Completion and Production product sales in North America.

First-quarter 2021 revenues of $176 million in Latin America increased 3% sequentially, driven by increased activity across all product lines.

First-quarter 2021 adjusted segment EBITDA of $52 million increased $11 million sequentially and associated margins of 13% improved by 230 basis points versus the fourth quarter of 2020 and 40 basis points above the first quarter of 2020. The growth in adjusted segment EBITDA was primarily driven by increased activity and sales in North America.

Eastern Hemisphere

First-quarter 2021 Eastern Hemisphere revenues of $442 million declined 6% sequentially and 30% year-on-year.

In the Middle East, North Africa, and Asia, first-quarter 2021 revenues of $267 million declined 8% sequentially, primarily due to seasonally lower product sales in Completion and Production across the Middle East and Asia.

First-quarter 2021 revenues in Europe, Sub Saharan Africa, and Russia of $175 million decreased 3% sequentially, primarily due to seasonally lower product sales in the Eastern Hemisphere partially offset by an increase in Drilling, Evaluation, and Intervention sales in Europe and the Middle East.

First-quarter 2021 adjusted segment EBITDA of $66 million decreased $21 million sequentially, and associated margins of 15% declined 360 basis points versus the fourth quarter of 2020. The sequential decline in adjusted segment EBITDA was primarily due to seasonally driven lower activity.

About Weatherford

Weatherford is a leading wellbore and production solutions company. Operating in more than 75 countries, the Company answers the challenges of the energy industry with its global talent network of approximately 17,000 team members and approximately 380 operating locations, including manufacturing, research and development, service, and training facilities. Visit https://www.weatherford.com/ for more information or connect on LinkedIn, Facebook, Twitter, Instagram, or YouTube.

Conference Call Details

Weatherford will host a conference call on Thursday, May 6, 2021, to discuss the results for the first quarter ending March 31, 2021. The conference call will begin at 9:00 a.m. Eastern Time (8:00 a.m. Central Time).

Listeners are encouraged to download the accompanying presentation slides which will be available in the investor relations section of the Company's website.

Listeners can participate in the conference call via a live webcast at https://www.weatherford.com/en/investor-relations/investor-news-and-events/events/ or by dialing +1 877-328-5344 (within the U.S.) or +1 412-902-6762 (outside of the U.S.) and asking for the Weatherford conference call. Listeners should log in or dial in approximately 10 minutes prior to the start of the call.

A telephonic replay of the conference call will be available until May 20, 2021, at 5:00 p.m. Eastern Time. To access the replay, please dial +1 877-344-7529 (within the U.S.) or +1 412-317-0088 (outside of the U.S.) and reference conference number 10153725.

Contacts
For Investors:
Mohammed Topiwala
Director Investor Relations and M&A

+1 713-836-7777
[email protected]

For Media:
Kelley Hughes
Director, Global Communications

+1 713-836-4193
[email protected]

Forward-Looking Statements

This news release contains forward-looking statements concerning, among other things, the Company's quarterly and full-year revenues, operating losses, adjusted EBITDA, unlevered free cash flow, forecasts or expectations regarding business outlook, cost savings plans, and capital expenditures, and are also generally identified by the words "believe," "project," "expect," "anticipate," "estimate," "outlook," "budget," "intend," "strategy," "plan," "guidance," "may," "should," "could," "will," "would," "will be," "will continue," "will likely result," and similar expressions, although not all forward-looking statements contain these identifying words. Such statements are based upon the current beliefs of Weatherford's management and are subject to significant risks, assumptions, and uncertainties. Should one or more of these risks or uncertainties materialize, or underlying assumptions prove incorrect, actual results may vary materially from those indicated in our forward-looking statements. Readers are cautioned that forward-looking statements are only predictions and may differ materially from actual future events or results, including the price and price volatility of oil and natural gas; the extent or duration of business interruptions, demand for oil and gas and depressed commodity prices associated with COVID-19 pandemic; general global economic repercussions related to COVID-19 pandemic; the macroeconomic outlook for the oil and gas industry; and operational challenges relating to the COVID-19 pandemic and efforts to mitigate the spread of the virus, including logistical challenges, protecting the health and well-being of our employees, remote work arrangements, performance of contracts and supply chain disruptions; our ability to generate cash flow from operations to fund our operations; and the realization of additional cost savings and operational efficiencies. Forward-looking statements are also affected by the risk factors described in the Company's Annual Report on Form 10-K for the year ended December 31, 2020, and those set forth from time-to-time in the Company's other filings with the Securities and Exchange Commission. We undertake no obligation to correct or update any forward-looking statement, whether as a result of new information, future events, or otherwise, except to the extent required under federal securities laws.

We report our financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, Weatherford's management believes that certain non-GAAP financial measures and ratios (as defined under the SEC's Regulation G and Item 10(e) of Regulation S-K) may provide users of this financial information additional meaningful comparisons between current results and results of prior periods and comparisons with peer companies. The non-GAAP amounts shown in the following tables should not be considered as substitutes for operating income, provision for income taxes, net income or other data prepared and reported in accordance with GAAP, but should be viewed in addition to the Company's reported results prepared in accordance with GAAP.

SOURCE Weatherford International plc

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