Weatherford International (WFT) Keeps Oilfield Services Afloat Amid Sell-Off

Michael Teague  |

Oil and gas services companies were withstanding Friday’s bloodletting reasonably well, with the industry as a whole among the day’s best performers despite the fact that it was trading on the flatline heading towards the closing bell.

Equipment and services providers are an increasingly heterogeneous bunch these days, largely due to the rush into unconventionals in recent years. The broad category of “tight” oil and gas, better-known to most as shale (though this is only one of several categories of tight reserves), as well as offshore producers searching in ever deeper and more treacherous waters has largely been the driving force behind the fragmentation of the industry.

Be that as it may, the industry still has its own “major integrated” firms like Halliburton (HAL) and Schlumberger (SLB) , who are the largest in the business and are able not only to offer a comprehensive range of services to their clients but also spend enormous amounts of money on the research and development of unconventional technologies.

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While those two giants reported first-quarter earnings last week, with mixed but fairly optimistic results, Friday’s session saw them just slightly lower and on rather unremarkable volume. Meanwhile, the fifth-largest company by market-cap, Switzerland-based Weatherford International (WFT) was carrying the day with its best performance in some three years after the company unveiled financial results from the recently-ended period during the previous day’s afterhours session.

Indeed, the company’s Q1 was a very decent one to say the least; net income of $99 million, a diluted $0.13 per share, on revenues of $3.6 billion was a vast improvement on the prior year period, during which the company netted $22 million on slightly higher revenue of $3.84 billion. The results were also ahead of the average of analysts’ expectations for EPS of $0.11 per share but were a miss against expectations of revenue for $3.73 million.

Furthermore, the company saw revenues fall almost 5 percent in North America due to the harsh winter as well as the easy availability of hydraulic fracturing equipment and servicers on the continent. Middle East/North Africa revenues were down 0.5 percent year-over-year, and in Latin America plummeted by over 25 percent. The only region in which Weatherford posted gains was its oddly classified Europe/Sub-Sahra/Russia segment, were revenues were up 4.9 percent.

Be that as it may, the stock was trading 10.5 percent higher heading towards the close of the week after establishing a new 52-week high earlier in the day and doing so on about five times average volume with over 27 million shares changing hands.

Clearly, investors were not buying the company’s operational excellence, nor its financial performance, given that Weatherford has come up short of earnings estimates in all but one of the past 11 quarters. Instead, it would seem as though the market was pleasantly surprised to see a third fiscal period in a row in which the company didn’t offer up huge disappointments.

In addition, Weatherford has been making strides in restructuring its business, and during Thursday’s conference call CEO Bernard Duroc-Danner told investors that the company intends to shed anywhere from $500 million to $1 billion in assets by the end of 2014.

In late trading, shares for the $15.75 billion company were up 11 percent to $20.44.

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