Company Reports

Weatherford's second-quarter revenue of $1.1 billion decreased 8% year on year, though unsurprisingly, disruptions in the Middle East played a role. Weatherford's drilling and evaluation segment unsurprisingly took the brunt of this disruption as producers focus on current assets.

Weatherford is a subscale, integrated oilfield services provider that emerged from a bankruptcy reorganization in 2019. Years of losses, siloed business operations, poor incentive structures, and heavy leverage all contributed to bankruptcy. Significant leverage and poor integration were a byproduct of heavy M&A activity, where Weatherford became focused on achieving scale like the Big Three in SLB, Halliburton, and Baker Hughes. By contrast, the Big Three primarily focused their investments on key areas of strength, bolstering market-leading positions in these solutions that still stand today.

Weatherford's first-quarter revenue declined 3% year on year to $1.15 billion, while adjusted EBITDA margin declined 98 basis points to 20.2%. Revenue was in line with expectations and EBITDA disappointed, though cash collections were much better than what we were expecting.

Weatherford is a subscale, integrated oilfield services provider that emerged from a bankruptcy reorganization in 2019. Years of losses, siloed business operations, poor incentive structures, and heavy leverage all contributed to bankruptcy. Significant leverage and poor integration were a byproduct of heavy M&A activity, where Weatherford became focused on achieving scale like the Big Three in SLB, Halliburton, and Baker Hughes. By contrast, the Big Three primarily focused their investments on key areas of strength, bolstering market-leading positions in these solutions that still stand today.

Over the March 14-15 weekend, the US conducted large-scale strikes on Kharg Island, according to NBC News. The island houses Iran's critical crude export terminal, which ships over 90% of Iran's crude exports. We understand that the strikes focused on military targets and avoided oil infrastructure.

Weatherford reported strong fourth-quarter earnings that exceeded both our top-line and EBITDA expectations. EBITDA margin improved 74 basis points sequentially to 22.6%, while free cash flow of $222 million was a surprise to the upside.

Weatherford is a subscale, integrated oilfield services provider that emerged from a bankruptcy reorganization in 2019. Years of losses, siloed business operations, poor incentive structures, and heavy leverage all contributed to bankruptcy. Significant leverage and poor integration were a byproduct of heavy M&A activity, where Weatherford became focused on achieving scale like the Big Three in SLB, Halliburton, and Baker Hughes. By contrast, the Big Three primarily focused their investments on key areas of strength, bolstering market-leading positions in these solutions that still stand today.

Weatherford is a subscale, integrated oilfield services provider that emerged from a bankruptcy reorganization in 2019. Years of losses, siloed business operations, poor incentive structures, and heavy leverage all contributed to bankruptcy. Significant leverage and poor integration were a byproduct of heavy M&A activity, where Weatherford became focused on achieving scale like the Big Three in SLB, Halliburton, and Baker Hughes. By contrast, the Big Three primarily focused their investments on key areas of strength, bolstering market-leading positions in these solutions that still stand today.

Weatherford's third-quarter segment adjusted EBITDA margin declined 336 basis points year over year, but improved 74 basis points sequentially to 21.8% on $1.23 billion revenue. The firm's adjusted FCF rose by 25% to $99 million sequentially.

We've updated our midcycle oil price assumption. Our 10-year forecast marries our bullish in-house oil demand view with Rystad's supply projections, which aligns with our revised, long-term take.

We've transferred coverage of Weatherford to a new analyst. Weatherford emerged from bankruptcy in late 2019. It's now a $4 billion-plus market cap, global integrated oilfield services firm. It is best known for its leading tubular running service and rod lift offerings.

Weatherford is a subscale, integrated oilfield services provider that emerged from a bankruptcy reorganization in 2019. Years of losses, siloed business operations, poor incentive structures, and heavy leverage all contributed to bankruptcy. Significant leverage and poor integration were a byproduct of heavy M&A activity, where Weatherford became focused on achieving scale like the Big Three in SLB, Halliburton, and Baker Hughes. By contrast, the Big Three primarily focused their investments on key areas of strength, bolstering market-leading positions in these solutions that still stand today.

Weatherford International is one of the larger oilfield-services firms in an otherwise hyper fragmented industry. However, in terms of size, it remains some distance from the industry’s Big Three: SLB, Baker Hughes, and Halliburton.

Weatherford’s second-quarter revenue rose just over 1% sequentially to $1.2 billion, marginally above our expectations. By contrast, adjusted EBITDA margin declined by 11 basis points sequentially to 21.4%, but also beat our estimates. Shares rose by nearly 5% on the trading day.

Weatherford’s first-quarter revenue came in a little under $1.2 billion, which was roughly 3% below our estimate. Shares are down about 7% following the earnings release.

Weatherford International is one of the larger oilfield-services firms in an otherwise hyper fragmented industry. However, in terms of size, it remains some distance from the industry’s Big Three: SLB, Baker Hughes, and Halliburton.

Weatherford International is one of the larger oilfield-services firms in an otherwise hyper fragmented industry. However, in terms of size, it remains some distance from the industry’s Big Three: SLB, Baker Hughes, and Halliburton.

No-moat-rated Weatherford results trailed our fourth-quarter expectations and PitchBook revenue consensus, but its GAAP earnings per share of $1.50 beat the Street’s earnings expectations by $0.14. Still, our outlook for oilfield services companies is now more bearish given the weaker global macroeconomic environment, particularly as it affects oil demand from China. We’d also flag general concerns that the global market for oil remains oversupplied. So, we expect less producer spending overall, and therefore reduce our fair value estimate to $77 from $84.

Weatherford International is one of the larger oilfield-services firms in an otherwise hyper fragmented industry. However, in terms of size, it remains some distance from the industry’s Big Three: SLB, Baker Hughes, and Halliburton.

No-moat Weatherford beat the PitchBook consensus diluted earnings per share by $0.91 or 54%, while coming in slightly below consensus revenue, growing 7% over the prior year. On their own, these are positive results, but from management commentary, we can see that Weatherford is not immune to the challenges facing the whole sector. As a result, we are lowering our fair value to $84 per share from $91.