HOUSTON - Weatherford International plc (NASDAQ: NASDAQ:WFRD), a global energy services company, has announced the acquisition of two significant contracts in the Middle East with the Kuwait Oil Company (KOC) and a National Oil Company (NOC) in Qatar. The deal with KOC involves Managed Pressure Drilling (MPD) services utilizing Weatherford's Victus Intelligent MPD system, designed to enhance operational efficiency and safety while reducing costs and accelerating well-delivery timelines.
The Victus system is recognized for its automation capabilities and precision, offering safer and faster drilling by managing pressure control and integrating real-time data to optimize well conditions, particularly in complex drilling situations. This technology aligns with KOC's objectives to improve safety, speed, and cost-effectiveness in their drilling operations.
Additionally, Weatherford has secured a five-year contract with an NOC in Qatar to supply fishing and drilling tools, with an option to extend for an additional five years. This agreement underlines Weatherford's commitment to bolstering the NOC's operational resilience through advanced fishing and drilling solutions, coupled with Weatherford's technical expertise, to navigate challenging drilling scenarios efficiently.
Girish Saligram, President and Chief Executive Officer of Weatherford, stated, "Weatherford is honored to partner with both KOC and an NOC in Qatar. These agreements underscore our commitment to delivering cutting-edge technologies and dependable service, reinforcing our position as a trusted partner in the Middle East and supporting regional operators in achieving their enhanced safety, efficiency, and resilience goals."
Weatherford operates in around 75 countries with approximately 19,000 employees and 330 operating locations. The company is known for integrating proven technologies with advanced digitalization to create sustainable offerings that maximize value and return on investment for its customers.
The information regarding the new contracts and Weatherford's role in the energy services industry is based on a press release statement.
In other recent news, Weatherford International has seen steady growth in its third-quarter earnings, maintaining an adjusted EBITDA margin of 25.2% and generating an adjusted free cash flow of $184 million. The company's revenue remained stable sequentially but increased by 7% from the previous year, largely driven by a 9% rise in international revenue. Weatherford also announced the initiation of a capital return program, which includes a quarterly dividend and share repurchases.
Evercore ISI has updated its outlook on Weatherford, lowering the price target to $142.00 from $149.00, while maintaining an 'Outperform' rating. The firm's analysis indicates that despite a somewhat weaker near-term outlook, Weatherford is poised to benefit from a favorable geographical mix and the sustained international and offshore market upcycle. Growth expectations in key regions such as the Middle East, Latin America, and Asia have been adjusted and are anticipated to stay moderate into 2025.
Moreover, Weatherford's efficient cost structure and cost reduction initiatives are expected to bolster margins to high-20s percentages in the coming years. The company has also provided insights into strategic acquisitions and technology enhancements, aiming to drive future growth and margin expansion. These are recent developments that highlight Weatherford's strategic approach to growth and profitability.
InvestingPro Insights
Weatherford International's recent contract wins in the Middle East align well with its strong financial performance and market position. According to InvestingPro data, the company's revenue growth stands at 11.08% for the last twelve months as of Q3 2024, with a robust EBITDA growth of 17.98% over the same period. These figures suggest that Weatherford's strategy of delivering cutting-edge technologies and dependable services is translating into tangible financial results.
The company's operational efficiency is reflected in its impressive operating income margin of 17.28%, indicating effective cost management and high-value service delivery. This efficiency is likely to be further enhanced by the implementation of advanced technologies like the Victus Intelligent MPD system in the Kuwait Oil Company contract.
InvestingPro Tips highlight that Weatherford is trading at a low P/E ratio relative to its near-term earnings growth, with a PEG ratio of just 0.21. This suggests that the stock may be undervalued considering its growth prospects, which could be bolstered by these new contracts. Additionally, the company's strong return over the last five years indicates a track record of delivering value to shareholders.
It's worth noting that Weatherford operates with a moderate level of debt and its liquid assets exceed short-term obligations, providing financial flexibility to support its expansion and technological investments in key markets like the Middle East.
For investors seeking more comprehensive analysis, InvestingPro offers 8 additional tips for Weatherford International, providing deeper insights into the company's financial health and market position.
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