Weatherford International LtdWFT

Morningstar Rating

Stock Research and Analysis

by Stephen Ellis

Weatherford is one of the best fast followers in the oil services industry. The company has followed Schlumberger and Halliburton around the world, and it has invested billions in intellectual property and acquisitions over the past few years to catch Read more

Bulls Say

Operators have recently cited horizontal drilling as the most important trend affecting their spending plans, rather than seismic technology. A renewed focus by operators on drilling technologies like horizontal drilling could mean more interest in Weatherford's technologies like underbalanced drilling.

In extremely deep wells, equipment reliability as measured by ability to withstand pressure is a key differentiator, and Weatherford's equipment has replaced failed equipment from competitors.

We expect the company's low market share to increase with the introduction of new products. Read more

Bears Say

Weatherford's returns on invested capital have been weaker than competitors', indicating that the firm is having difficulty delivering shareholder value.

Larger peers like Schlumberger and Halliburton have more resources to help them develop better technology than Weatherford. The firm needs to continuously innovate to maintain its leadership position.

Competition for contracts in the Middle East could challenge Weatherford's ability to win contracts at reasonable margins. Read more

Strategy

Weatherford's strategy is to bring innovative products to market and protect them with patents. The company has leading products in premium niche markets, such as rotary steering systems and underbalanced Read more

Management

CEO Bernard Duroc-Danner has been leading the company for more than 20 years. We see his total compensation of $17.5 million in 2008 as excessive. This package places Duroc-Danner in the same league as CEOs from much larger competitors such as Halliburton Read more

Profile

Weatherford International provides a large portfolio of services, including pressure pumping, directional drilling, and artificial lift, which help boost oil and natural Read more

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