Highlights

• Revenues of $807 million declined 2% sequentially, with growth of 2% in North America offset by declines of 3% internationally
• Operating loss of $60 million and adjusted EBITDA of $104 million
• Cash flows from operations of $127 million and unlevered free cash flow of $107 million
• Total cash of $1.3 billion as of September 30, 2020; completed transactions that enhanced liquidity and removed substantial doubt language from filings
• Hosted 15th annual Weatherford Enterprise Software Conference with over 500 clients participating worldwide

Weatherford International has announced its results for the third quarter of 2020.

Revenues for the third quarter of 2020 were $807 million, a decline of 2% sequentially and 39% year-on-year. Reported operating loss was $60 million in the third quarter of 2020, compared to an operating loss of $497 million in the second quarter of 2020 and $447 million in the third quarter of 2019. The Company's third-quarter 2020 net loss was $174 million, compared to a net loss of $581 million in the second quarter of 2020 and $821 million in the third quarter of 2019. Third-quarter 2020 cash flows from operations were $127 million and capital expenditures were $27 million.

Girish Saligram, President and Chief Executive Officer, commented, 
"I am honored by the opportunity to lead Weatherford and I am excited about the Company's potential to create meaningful value for our shareholders. My objective is for Weatherford to continue to partner with our customers to solve their challenges, while also generating sustainable levels of profitability and positive free cash flow. I believe our Company has a unique combination of key attributes that will enable us to achieve this goal, including a comprehensive technology portfolio, a global footprint, deep customer relationships, an extraordinary culture and a talented employee base that is committed to seeing the Company succeed.

"I am pleased with the organization's continued focus on delivering operational excellence, while also implementing structural improvements to minimize the impact of activity reductions and improve the Company's operating efficiency. We delivered sequential revenue growth of 2% in North America and adjusted segment EBITDA margins expanded by 730 basis points in the Western Hemisphere. We implemented actions to exceed our $800 million annualized cost savings plan and expect further cost and efficiency improvements going forward. We are relentlessly focusing on enhancing liquidity, with the new $500 million financing and the generation of over $100 million in free cash flow, bringing total cash [1] to approximately $1.3 billion as of September 30, 2020.

"While our market outlook remains cautious, we are encouraged by the fact that we have started to see activity stabilize in certain geographies and a gradual path to recovery in others. We have extended our runway for capitalizing on new opportunities and we will be working as a team to refine the Company's strategy over the coming months, focusing on leveraging our sustainable competitive advantages in order to achieve our objective. I look forward to updating you on our plans and outlook for 2021 early next year."

Leveraging Portfolio

The Weatherford team in Brazil has achieved over two years without a lost-time incident as well as a record safety score during its quarterly QHSE review with a customer. These milestones demonstrate the Company's commitment and dedication to high-quality operations and flawless execution as well as high levels of collaboration amongst the One Weatherford team.

Weatherford was awarded a two-year contract by a customer in the Middle East to deliver products and services from our Completions, Liner Hangers and Cementation businesses. Weatherford was able to deliver meaningful value to the customer by leveraging our manufacturing center of excellence in Abu Dhabi.

Weatherford was also awarded the first managed pressure drilling (MPD) contract by a customer in the Middle East. The multi-year contract will deploy Weatherford's intelligent MPD solution across all well types and covers the customer's entire scope of work. The introduction of MPD services will improve the customer's ability to address drilling hazards while enabling them to drill wells faster, cheaper, and safer with less impact on the reservoir.

The Company has and will continue to deploy its innovative solutions to meet customer's needs, including:

• In the United Kingdom, Weatherford successfully deployed its Vero® automated connection integrity solution to run a chrome completion string in record time on a high-pressure, high-temperature asset. The Vero solution doubled previous run rates and saved the operator two days of rig time;
• A major operator in the United States will deploy the ForeSite® production optimization software platform across their assets in an entire basin, allowing them to monitor and manage thousands of wells with an exception-based methodology that will help improve production and reduce costs by identifying well reliability issues in advance. This implementation allowed the customer to securely migrate historical production and workover records into ForeSite while also consolidating eight systems; and
• Weatherford will deploy its Centro™ digital well delivery solution for a national oil company in the Middle East. The service will combine offerings from the Company's directional drilling and MPD businesses and will also utilize our real-time operations center in the region.

Expanding Margins

The Company has implemented actions to exceed its previously-announced cost savings plan, which is expected to generate over $800 million of savings on an annualized basis and expects further cost and efficiency improvements going forward.

The impact of the Company's aggressive actions are materializing in their results, with third-quarter 2020 adjusted EBITDA margins increasing 328 basis points sequentially. Compared to the third quarter of 2019, adjusted EBITDA margins were down 72 basis points despite a 39% reduction in revenue over the same period, yielding year-on-year adjusted EBITDA decrementals of 15% (with decrementals calculated as the change in adjusted EBITDA divided by the change in revenues).

Enhancing Liquidity

The Company's liquidity position was enhanced during the quarter through both external and internal actions, with total cash increasing by $537 million sequentially to approximately $1.3 billion as of September 30, 2020.

On August 28, 2020 the Company completed a series of financing transactions, including issuing $500 million of senior secured first lien notes, terminating its senior secured asset-based lending agreement, and amending and increasing the size of its senior secured letter of credit agreement (the "LC Credit Agreement") to $215 million.

These transactions meaningfully enhanced the Company's financial strength, with the proceeds of the Senior Secured Notes being used to terminate the ABL Credit Agreement, increase liquidity and support the issuance of letters of credit. In addition, by terminating the ABL Credit Agreement, Weatherford has eliminated the risk of a potential breach of the associated financial covenants. As a result, the Company has alleviated the previously disclosed substantial doubt of our ability to continue as a going concern.

Third-quarter 2020 unlevered free cash flow of $107 million was flat sequentially and improved $312 million year-on-year, due to the monetization of net working capital, reduced capital expenditures and our actions to expand margins.

KeyFacts Energy Directory: Weatherford