Weatherford Reports Fourth Quarter and 2016 Annual Results

BAAR, Switzerland, Feb. 1, 2017

Fourth Quarter 2016 Highlights

• Free cash flow generated from operations (non-GAAP) was $171 million;
• Operating margins improved by 273 basis points sequentially, with 68% incrementals; and
• Revenue of $1.41 billion was up 4% sequentially, led by North America and Middle East/North Africa/Asia Pacific regions.

Full Year 2016 Highlights

• Reduced net debt and extended debt maturities through a series of capital market transactions;
• Achieved annualized cost savings of $601 million;
• Achieved best safety record in Company history; and
• Reduced nonproductive time in core product lines by 24 percent year-over-year.

Krishna Shivram, Chief Executive Officer, stated, "During 2016, we took the necessary steps to secure our liquidity and provide a runway from which the Company can become consistently profitable and free cash flow positive. We also removed a significant level of fixed costs, while still achieving the best safety record in the company's history and measurably improving our service quality and performance.

I am pleased with our fourth quarter results. Revenue grew by 4% sequentially, despite approximately $40 million of lost revenue as we idled our U.S. pressure pumping business during the quarter. Sequential operating income incrementals were 68%, easily exceeding our targeted 50%. Excluding the land drilling rig business, revenue grew 4% with operating income incrementals of 73%, clearly exhibiting the power of increased revenue spread over a low and efficient fixed cost base.

North America revenue grew 8% and would have increased 17%, if we continued our pressure pumping activities for the full quarter. Both the U.S. and Canada grew strongly on land while offshore Gulf of Mexico weakened. Incrementals in North America were 104% as we removed costs throughout the fourth quarter. Operating losses in North America were $58 million including a loss of $29 million related to the pressure pumping business, which would have been negatively impacted by another $20 million had this business continued through the quarter.

International revenue grew 2% while operating margins improved slightly. In Latin America, activity levels were weak in Mexico, Venezuela and Brazil; restructuring of the industry in Argentina placed downward pressure on pricing, while activity in Colombia surged.  Eastern Hemisphere revenue grew 4% sequentially with 168 basis point margin improvement and 39% incrementals. Product sales were approximately $40 million higher than the normal quarterly level. The North Sea and Russia experienced a seasonal slowdown. Sub-Sahara Africa activity declined in Angola and Nigeria while Asia-Pacific benefited from product sales in Australia and Malaysia. The Middle East/North Africa region was positively impacted by higher product sales as well as the start-up of activities on several of the service contracts won over the last six months. We expect to start-up on the remaining service contracts in early 2017.