Weatherford: Q4 and 2014 Annual Results – Debt Down $1.2bn

Weatherford International plc reported net income before charges of $252 million ($0.32 diluted earnings per share non-GAAP) on revenues of $3.73 billion for the fourth quarter of 2014.

– Fourth Quarter EPS of $0.32 per share (non-GAAP)

– Reduces Net Debt by $1.1 billion and generates free cash flow of $180 million

Full Year 2014 Highlights

• Margin improvement of 24% and non-GAAP earnings per share improvement of 67% from 2013;
• Non-core divestiture proceeds over $1.7 billion;
• Net Debt reduction over $1.2 billion;
• Annualized pre-tax cost reduction of $500 million; and
• Multiple U.S. government agency investigations settled.

Fourth Quarter 2014 Highlights

• Completed the sale of our Engineered Chemistry and Integrity Drilling Fluids businesses;
• Completed the sale of our investment in Proserv Group Inc.;
• Generated free cash flow from operations of $180 million; and
• Reduced net debt by $1.1 billion using proceeds from the divestitures and positive free cash flow from operations.

Bernard J. Duroc-Danner, Chairman of the Board, President and Chief Executive Officer, stated, “We complete 2014 having successfully achieved many of the objectives we set for ourselves a year ago. With a clear and disciplined strategy along with a highly committed management team and group of employees, we generated non-core divestiture proceeds of over $1.7 billion, significantly exceeding our target of $1.0 billion, thereby de-risking the Company substantially, ahead of a cyclically challenged year. We also significantly lowered our cost structure, achieving our goal of $500 million in annualized pre-tax savings. We showed progression on key operating and financial metrics, and we emerge a stronger and leaner company.

With a capable and focused team, we are ready to react swiftly to a dramatically changing landscape. We will adjust to a new reality by focusing on cash and cost, and re-direct the Company’s focus externally. We have a clear view of the additional measures needed to guide our Company as well as the intensity, focus and experience to navigate through the present environment.”

Fourth Quarter 2014 Results

Revenue for the fourth quarter of $3.73 billion compared with $3.88 billion in the third quarter of 2014 and $3.74 billion in the fourth quarter of 2013. Excluding the impact of our divested businesses, fourth quarter revenues declined 1% sequentially.ￂﾠ GAAP Net Loss for the fourth quarter of 2014 was $475 million, or $0.61 per diluted share.

After-tax charges of $727 million for the fourth quarter include:

• $592 million (pre-tax $618 million), primarily for rig related asset impairment and other related charges;
• $252 million (pre-tax $245 million), due to the devaluation of the Venezuelan Bolivar;
• $41 million (pre-tax $58 million), of severance costs related to our 2015 workforce reduction plan;
• $41 million (pre-tax $40 million), associated with the legacy work in Iraq; and
• a $199 million gain (pre-tax $311 million), associated with our divestitures, which partially off-set the charges above.

Net income on a non-GAAP basis for the fourth quarter of 2014 was $252 million compared to $248 million in the third quarter of 2014 and $53 million in the fourth quarter of 2013.

Operating income margin improved 475 basis points compared to the fourth quarter of 2013. Sequential operating income declined 8% during the fourth quarter with operating income margins declining 63 basis points in the fourth quarter to 14.8%.

Regional Highlights

• North America

Fourth quarter revenues of $1.77 billion were down $45 million, or 2% sequentially, and up $197 million, or 13%, over the same quarter in the prior year. Fourth quarter operating income of $283 million (16.0% margin) down 3% sequentially and up 31% from the same quarter in the prior year. The sequential decrease was due to a reduction in activity levels by customers as operators began cutting back on uneconomic activity in December.

• Latin America

Fourth quarter revenues of $680 million were up $69 million, or 11% sequentially, and up $23 million, or 4%, compared to the same quarter in the prior year. Fourth quarter operating income of$109 million (16.0% margin) was up $19 million, or 21% sequentially, and up $47 million, or 76%, compared to the same quarter in the prior year. The sequential improvements in revenue and operating income were driven by additional well construction activity in Brazil and across all product lines in Colombia.

• Europe/Sub-Sahara Africa/Russia

Fourth quarter revenues of $526 million were down $118 million, or 18% sequentially, and down$162 million, or 24%, over the same quarter in the prior year.ￂﾠ Fourth quarter operating income of$102 million (19.4% margin) was down $38 million, or 27%, sequentially and was up 117% when compared to the same quarter in the prior year. The sequential decline in revenues and operating income is primarily due to our sale of the pipeline and land drilling and workover rig operations inRussia in the early part of the third quarter.ￂﾠ Sequential revenues were down seasonally in Russiaand the North Sea and due to the impact of a markedly weaker Russian ruble.

• Middle East/North Africa/Asia Pacific

Fourth quarter revenues of $752 million were down $56 million, or 7% sequentially, and down $69 million, or 8%, over the same quarter in the prior year. Fourth quarter operating income of $58 million (7.7% margin) was down 24% sequentially and increased 16% from the same quarter in the prior year.ￂﾠ The decline in revenues and operating income is attributable to lower land rigs revenue partially offset by the contribution from our core product lines, primarily Artificial Lift.

Net Debt

Net debt decreased by $1.1 billion sequentially, primarily due to the cash proceeds related to the divestiture of non-core businesses and positive free cash flow from operations. Capital expenditures of $380 million (net of lost-in-hole) in the fourth quarter were up sequentially by 9% and were up 12% versus the prior year quarter.

Outlook

Due to the quickly changing market conditions, we are aligning and reducing our cost as well as organizational structures to match the new environment. As a result, we will have a leaner structure and a tighter organization. We have commenced a reduction-in-force exercise targeting 5,000 positions, of which more than 85% are located in the Western Hemisphere. The headcount reduction is expected to be complete by the end of the first quarter of 2015, resulting in expected annualized savings of over $350 million. Weatherford is also offering a Voluntary Separation Opportunity Program to eligible employees as part of the recognized need to reduce our employee workforce. The focus is on both operating and support positions. In addition, we launched a procurement savings initiative in the last quarter of 2014 designed to achieve $300 million of annualized savings over the next two years. Over the next few quarters, we will review and adjust our direct and structural cost base further.

During the upcoming year, our focus will be to generate positive free cash flow from operations, despite challenging industry conditions. We expect our cost actions, a reduction in capital expenditures by $550 million to $900 million in 2015 and a positive contribution from working capital balances to more than offset any reduction in earnings.

Bernard J. Duroc-Danner, Chairman, President and Chief Executive Officer commented, “We will focus the entire organization on ensuring we are cash flow positive in 2015. This means that for every dollar of revenue we lose due to reduced activity and pricing, we will make up for it in cost, capital expenditure and working capital reductions. Our team will be focused on swift market responsiveness. The joint effect of driving our technologies and optimizing our cost structure will support our customers’ priorities. We enter 2015 with strong core businesses, a de-risked financial position and an organization focused on working closely with our customers. We expect to emerge from this down cycle much leaner and stronger than we were going into it.”

Non-GAAP Financial Measures

Unless explicitly stated to the contrary, all financial measures used throughout this document are non-GAAP. Corresponding reconciliations to GAAP financial measures have been provided in the following pages to offer meaningful comparisons between current results and results in prior periods.

About Weatherford

Weatherford is one of the largest multinational oilfield service companies providing innovative solutions, technology and services to the oil and gas industry. The Company’s product and service portfolio spans the lifecycle of the well, and includes Well Construction, Formation Evaluation, Completion and Artificial Lift. Weatherford is Irish-based, operates in over 100 countries, and currently employs approximately 56,000 people worldwide.ￂﾠ For more information, visitwww.weatherford.com.