Big sales did not result in big profits for Weatherford in 2012, as it reported record revenue but losses both for fourth quarter and the year.
Weatherford, a Geneva-based company that was headquartered in Houston until 2009, has struggled to emerge from an accounting crisis related to an Iraqi contract in 2011 but said that all outstanding matters were resolved by the end of fourth quarter.
“The fourth quarter was the last step in a year of immense internal focus,” said Bernard Duroc-Danner, CEO of Weatherford. “The 2012 audit closes a chapter of our exhausted tax accounting introspection. The company can now move forward in 2013 and beyond and financially perform without any encumbrances.”
The company reported a net loss of $122 million for fourth quarter 2012, a further drop from its net loss of $13 million for the same time last year. Its revenue for fourth quarter was $4.1 billion, up from $3.7 billion for the same time last year. The company reported a loss of $778 million on revenue of $15.2 billion for the year 2012, a sharp drop from $189 million in earnings on revenue of $13 billion in 2011.
Weatherford provides a variety of services and equipment to drill and complete oil and gas wells. Analysts consider it a possible takeover target for a larger oil services company, such as Halliburton.
Tax obligations contributed heavily to the 2012 loss in the aftermath of the accounting scandal, as the company set aside a $462 million provision for its annual taxes.
Weatherford assured investors that it is a situation the company will not repeat.
“We will use what we learned to reduce our tax rate going forward,” said John Briscoe, chief financial officer for Weatherford. “A 92 percent tax rate for the quarter and a 50 percent annual rate are not in line with how we manage our income tax expense going forward.”
It will, however, feel the impact of the Venezuelan devaluation of its currency in early February, and Briscoe anticipates a resulting loss of about $60 million for the first quarter 2013.
“We initiated a program last summer to reduce our exposure to devaluation in Venezuela and this resulted in a significant reduction in our exposure,” Briscoe said. “However, Venezuela is a market where we conduct significant operations, and mitigation of currency exposure takes time.”