Weatherford International Plc (NYSE:WFT) reported that revenue for 2Q2016 came at $1.40 billion against the revenue of $1.59 billion in 1Q2016. Also, the second quarter revenue dropped 41% from the same quarter, a year earlier. The industry has hit a bottom on the pricing as well as activity fronts. Clients have begun to identify that reliable, high quality services and products have been cut-price below economic minimum levels.
The management speaks
Bernard J. Duroc-Danner, the CEO of Weatherford, said that in 2Q2016 they continued to boost progress both financially and operationally. On the operational aspect, the results highlight the cost transformation impact, resulting in adjusted operating income dropping by only $11 million, with an increase in adjusted earnings per share. The operating results benefitted from continued cost reduction initiatives, boosting adjusted operating income decrementals of 24% YoY and 6% sequentially.
North America revenue dropped 26%, outpacing a 35% decline in average rig count and persistent pricing challenges. While, operating losses declined considerably, with aggressive cost measures taken this year. It appears as if activity levels in North America market have hit a bottom.
Globally, Weatherford revenue dropped 3% on a rig count decline of 7%. The revenue from Eastern Hemisphere increased 4% sequentially while Latin America faced the big decline with steep consumer spending reductions across the board. On the financial aspect, the company completed two capital markets deals, materially de-risking short-term financial profile and considerably improving overall liquidity position.
Weatherford reported that they have reduced short-term term debt maturities fir the upcoming 3 years to $639 million from $2.1 billion. This reduction in debt maturities ensures that they can fulfill existing requirements under any market scenario.
The deal closure of the Zubair production facility based in Iraq was a major achievement during the second quarter. They substantially achieved the target of headcount reduction for the year and continued to improve headcount support ratio. All these developments should positively affect the results moving forward.