Weatherford International(US:WFRD)2020-03-16 20:13Bankruptcy and Financial Restructuring - Weatherford International plc emerged from Chapter 11 bankruptcy on December 13, 2019, canceling $7.6 billion in unsecured senior and exchangeable senior notes[18]. - The company emerged from bankruptcy on December 13, 2019, after successfully completing its reorganization plan[67]. - The company incurred significant reorganization expenses during its Chapter 11 bankruptcy process, including a $4.3 billion gain on settlement of liabilities[177]. - Weatherford's credit ratings were assigned as B- by S&P Global Ratings and B1 by Moody's upon emergence from bankruptcy, indicating a non-investment grade status that may limit refinancing options[108]. - The company adopted fresh start accounting upon emergence from bankruptcy, resulting in a restated accumulated deficit to zero, making historical financial comparisons challenging[102]. Operational Performance and Strategy - The company reported a focus on profitable growth in core product lines, aligning technology development with customer objectives such as reducing operational expenditures and enhancing safety[22][23]. - Weatherford's operational performance is reviewed in two segments: Western Hemisphere and Eastern Hemisphere, with research and development expenses included in both[32]. - The company emphasizes technology development to enhance efficiency and reduce costs for customers, particularly in complex well designs and production decline management[25]. - Weatherford's principal services include production optimization, completions, drilling and evaluation, and well construction, catering to both onshore and offshore markets[33][34]. - The company aims to leverage Industry 4.0 technologies, including IoT and data analytics, to improve service delivery and operational efficiency[28]. - The company has a strong presence in over 80 countries, with service and sales locations in major oil and gas producing regions worldwide[14]. Financial Performance - Revenues for the year ended December 31, 2019, were $261 million, a significant decrease from $5,744 million in 2018[138]. - Operating loss for the year ended December 31, 2019, was $1 million compared to a loss of $2,084 million in 2018[138]. - Net loss attributable to Weatherford for the year ended December 31, 2019, was $26 million, a substantial improvement from a loss of $2,811 million in 2018[138]. - Total assets as of December 31, 2019, were $7,293 million, up from $6,601 million in 2018[138]. - Long-term debt as of December 31, 2019, was $2,151 million, a decrease from $7,605 million in 2018[138]. - Combined revenues in 2019 decreased by $529 million, or 9%, compared to 2018, primarily due to lower activity levels in Canada and reduced demand in the United States[168]. - Combined consolidated operating results improved by $903 million, or 43%, in 2019 compared to 2018, mainly due to lower goodwill impairment charges[170]. - Goodwill impairment charges of $730 million were recorded in 2019, reflecting lower activity levels and reduced exploration and production capital spending[181]. Market Conditions and Risks - Fluctuations in oil and natural gas prices significantly affect the level of exploration, development, and production activity of the company's customers[69]. - The cyclicality of the energy industry continues to impact demand for the company's products and services, particularly in North America[159]. - The company faces significant liquidity challenges, with approximately $2.2 billion in long-term debt and annual interest payments of about $231 million until December 1, 2024[87]. - The concentration of the customer base in the energy industry increases credit risk, as many customers are experiencing financial distress due to low commodity prices[78]. - Severe weather conditions and climate change could disrupt operations and negatively impact revenue and productivity[80]. Compliance and Regulatory Environment - The company’s operations are subject to various federal, state, and local laws and regulations relating to the energy industry and the environment[61]. - The company does not expect the cost of compliance with environmental laws and regulations for 2020 to be material[61]. - The company’s operations are subject to numerous environmental laws and regulations, which could lead to increased compliance costs and reduced business opportunities[92]. - The company may face potential increases in operational costs due to more stringent regulations on hydraulic fracturing, which could materially reduce business opportunities and revenues[93]. Shareholder and Corporate Governance - The concentration of ownership among the largest eight shareholders, owning over 80% of ordinary shares, may lead to conflicts of interest affecting corporate decisions[104]. - The rights of shareholders are governed by Irish law, which may afford less protection compared to U.S. laws, potentially complicating shareholder interests[126]. - Weatherford's ordinary shares began trading on the OTC Pink Marketplace after bankruptcy, with uncertainty regarding the development of an active trading market[105]. Employee and Talent Management - The company employed approximately 24,000 employees as of December 31, 2019, which is 9% and 18% lower than the workforce as of December 31, 2018 and 2017, respectively[62]. - The company may face difficulties in attracting and retaining skilled employees, which is critical for maintaining service quality and operational success[97]. Cybersecurity and Legal Risks - Cybersecurity incidents pose a risk to the company's information systems, potentially leading to data loss, reputational damage, and financial costs[116]. - The company does not currently maintain insurance coverage for cybersecurity risks, which could lead to material adverse effects if incidents occur[117]. - The company is subject to potential litigation regarding intellectual property rights, which could result in significant legal costs and adversely affect its business[115].