The world’s fourth largest oil field services provider’s New York-listed stock rose 20% to $US7.53 yesterday, the biggest intra-day run since March 2011, after telling analysts in a conference call it expected to generate $US600 million to $700 million ($A835-974 million) in free cash flow this year – more than the $495 million average of 12 analysts estimates that Bloomberg compiled.
Weatherford also managed to reduce its net debt by $191 million, closed a manufacturing facility and 20 more operating facilities in North America, while cutting 14,000 staff in 2015.
Weatherford’s North American business copped the brunt of the pain in what CEO Bernard Duroc-Danner described as “probably the most challenging year” in the company’s history, as he trumpeted its safety achievements during the tough times.
“In a year of massive decline and reduction in force, Weatherford achieved its highest metric for employee safety worldwide in its recorded history,” the CEO said.
“Safety achievements are seldom compatible with the disruptions of retrenchment.
“The brutality and length of this down-cycle has challenged the entire industry, both our customer base as well as our peers.
“Weatherford has responded to this challenge, something that we would probably not have been capable of doing in years past.
“We adjusted quickly to the new industrial context, took advantage of the downturn and aggressively transformed our cost base, addressing both the cyclical and structural. We have built on our operating progress with more efficiency, cash discipline, client focus and systematic talent upgrades.”
He said the company’s “relentless focus” on pro-active cost management was reflected in its 2015 realised annualised savings of nearly $1.4 billion and in its positive free cash flow from operations.
It also achieved operating income decrementals of 28% year-over-year – well ahead of its larger peers and bore no resemblance to the decrementals achieved during the last downturn.
“The explanation for our performance is simple,” Duroc-Danner said.
“It's all about discipline, discernment, and focus. We are a much stronger company today than we have been for a very long time, and we will strengthen further."
The oil industry has cut more than 250,000 jobs and more than $100 billion in spending in the last year, with more cuts to come in 2016.
