Weatherford (WFT) Incurs Narrower-than-Expected Q2 Loss

Leading oilfield services’ company Weatherford International Ltd. (NYSE:WFT) reported second-quarter 2016 adjusted loss of 28 cents per share, narrower than the Zacks Consensus Estimate of a loss of 30 cents. However, it did not fare better than the year-earlier adjusted loss of 10 cents per share.

Second-quarter total revenue decreased to $1,402.0 million from $2,390.0 million in the year-ago period. The reported figure also came in below the Zacks Consensus Estimate of $1,426.0 million.

Operational Performance

North American revenues for the second quarter were $401 million, down 50% from the year-ago comparable quarter. Significant decline in North American land rig count, which adversely impacted customer activity and spending, resulted in the downside. Operating loss of $101 million was wider than the operating loss of $92 million in the prior-year quarter.

Middle East/North Africa/Asia posted revenues of $400 million, down $116 million or 23% from the year-earlier quarter. The second-quarter operating income of $50 million was up 394% from the prior-year quarter. The revenue increase was primarily due to the settlement of the Zubair legacy contract in Iraq. This was partially offset by activity declines across many of the Asia Pacific operations.

Europe/West Africa/FSU posted revenues of $243 million, down $175 million or 42% from the year-earlier quarter. Operating income of $1 million was down 99% from the same quarter in the prior year. The revenue decline and operating loss were primarily due to customer activity reductions across offshore West Africa, principally in Angola, partly offset by the seasonal recovery in Russia.

Latin American revenues of $249 million were down $214 million or 46% year over year. Second-quarter operating income of $1 million was down 98% from the same quarter in the prior year. Activity declines, particularly in Mexico, Brazil and Colombia were the primary reasons for the decline in both revenues and operating income.

WEATHERFORD INT Price, Consensus and EPS Surprise

WEATHERFORD INT Price, Consensus and EPS Surprise | WEATHERFORD INT Quote

Liquidity

As of Jun 30, 2016, Weatherford had $452 million in cash and cash equivalents and long-term debt was $6,943 million. Weatherford spent approximately $31 million in capital expenditures during the reported quarter.

Zacks Rank

Weatherford currently carries a Zacks Rank #3 (Hold). Some better-ranked players from the energy sector are Murphy USA Inc. (NYSE:MUSA) , World Fuel Services Corp. (NYSE:INT) and North Atlantic Drilling Ltd. (NYSE:NADL) . Each of these stocks sports a Zacks Rank #1 (Strong Buy).