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Weatherford International

Weatherford International. Matt Miller 10-27-11. Business Summary.

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Weatherford International

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  1. Weatherford International Matt Miller 10-27-11

  2. Business Summary • Weatherford International provides a large portfolio of services, including pressure pumping, directional drilling, and artificial lift, which help boost oil and natural gas production. The firm's mainly international bases of customers are exploration and production companies, as well as national oil companies. The $2.3 billion acquisition of Precision Energy in 2005 broadened the company's product lines in wireline and directional drilling technologies.

  3. Company Fundamentals

  4. Company Fundamentals (cont)

  5. Company Fundamentals (cont)

  6. Company Fundamentals (cont)

  7. SWOT (Strengths) • Weatherford's investments have led to a number of innovative products in areas such as underbalanced drilling, which are capturing market share in carefully selected overseas markets • The company has more than doubled its service centers in the Middle East during the last few years, expect that this global footprint will serve as a revenue driver

  8. SWOT (Weakness) • The company still faces barriers to entry in certain markets, where bid tenders specify experience and product portfolio requirements that Weatherford cannot yet meet • Weatherford has been unable to achieve the same level of consistent service quality or offer a robust enough product portfolio to make them preferred services vendors by their customers

  9. SWOT (Opportunity) • Its forte is high-end technology such as underbalanced drilling and expandable sand screens • Both technologies help drive the company's focus on improving well productivity and efficiency for customers • This approach is highly attractive to national oil companies who want to retain reserves ownership, yet wish to develop their complex and unconventional resources in a cost-effective manner

  10. SWOT (Threats) • Larger competitors are better positioned to capture the best opportunities in the industry, and forced to compete on price, Weatherford will struggle to deliver shareholder value • The company's unrelenting focus on expansion presents risks

  11. 5 Year Chart

  12. Fair Value • Current Price: $15.28 • 52 Week Range: $10.85 - $26.25 • Fair Value: $23.00 • Consider Buy: $13.80 • Consider Sell: $35.70 • 1 Year Target: $23.80 • Projected Growth Rate: 39.65% compared to the industry estimated 16.25%

  13. Analyst Opinion

  14. Recommendation • Reported a strong third quarter with improving profit margins • Directly benefits from the current boom in the natural gas industry • HOLD – monitor for continued improvement in profits and earnings

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