Weatherford International Ltd (WFT: 15.56 0.00 0.00%), a leading oilfield services company, reported better-than-expected second quarter 2010 recurring earnings of 11 cents per share, compared with the Zacks Consensus Estimate of 7 cents and year-earlier profit of 10 cents.Like Weatherford, yesterday, sector leader Halliburton Company (HAL: 30.270.00 0.00%) posted second-quarter profit that beat the Zacks Consensus Estimate, owing primarily to strengthening activity in North America.
Total revenue in the quarter rose 22% year over year to $2.4 billion. Of the total quarterly revenue, North America, Middle East/North Africa/Asia, Europe/West Africa/CIS and Latin America segments accounted for 38%, 25%, 21% and 16%, respectively.
Operational Performance
North American revenue shot up 61% year over year to $921 million. Sequentially, revenue was up more than 3%. The sequential improvement was driven by growth across all product lines of the company. This segment posted an operating income of $129 million compared with the break-even operating results in the year-ago period. Sequentially, it was up more than 15%.
Revenues from Middle East/North Africa/Asia upped 1% year over year and 3% sequentially to $601 million. However, operating income was down 37% year over year and 6% sequentially.
Europe/West Africa/CIS revenues increased 39% year over year and 11% sequentially to $506 million. The year-over-year increase in revenue was driven by the contribution from the company’s acquisition of TNK-BP’s oilfield service business last year. However, operating income was flat year over year and up 63% sequentially.
Latin American revenues decreased 12% year over year and 4% sequentially to $410 million, mainly due to lower activity levels in Mexico. Operating income from this segment was $38 million, down 56% from the year-ago quarter and up 22% from the previous quarter.
As of March 31, 2010, the company’s debt was $6.6 billion, representing a debt-to-capitalization ratio of 40.7%. Weatherford’s capital expenditures were $218 million during the quarter.
Outlook
Strong results in North America and Europe/West Africa/CIS segments offset the Latin American weakness in the reported quarter. We prefer the stock for its growing international prospects, particularly in Russia and Iraq. Though the drilling moratorium has minimal impact on the company’s bottom line, we are concerned about the weakness in Latin America and near-term growth pace in international margins. 
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