weatherford international ltd. -...

© 2008 Weatherford. All rights reserved.

Weatherford International Ltd.

Lehman Brothers CEO Energy / Power Conference

September 2-4, 2008

1© 2008 Weatherford. All rights reserved.Six months ended June 30, 2008 annualized, except Capital Expenditures which are 2008 budget

$ 2,527EBITDA

$ 2,200Capital Expenditures

$ 1,301Income from Continuing Operations

$ 1,845Operating Income

$ 8,850Revenue

Vital Statistics

Financial Operational

100+Number of Countries

128Manufacturing Facilities

809Service Bases

74%% of Employees outside US

43,500Employees

10Product Lines

($ in millions)

2© 2008 Weatherford. All rights reserved.

Revenue

International 53%

North America47%

Geographic Overview

Six months ended June 30, 2008 annualized

Eastern Hemisphere 41%

Latin America 12%


Drilling Services

Directional Drilling

MWD

LWD

Rotary Steerable

Underbalanced

Managed Pressure

Coiled Tubing Drilling

Drilling with Casing

Wireline

Open Hole Wireline

Geoscience

Surface Logging

Core Evaluation

Cased Hole Wireline

Slickline

Well Construction

Tubular Running

Cementation

Liner Hangers

Inflatables

Expandable Solids

Re-entry & Fishing

Casing Exit

Fishing

Thru-Tubing

Drilling Tools

Drilling Products

Rentals

Integrated Drilling

Contract Drilling

Integrated Management

Completion

Completion Tools

Sand Screens

Expandable Screens

Intelligent Completion

Fiber Optic Sensing

Field Optimization

Stimulation & Chemicals

Fracturing Services

Production Chemicals

Coiled Tubing

Pipeline & Specialty Services

Pre-commissioning

Inspection

Artificial Lift

Progressing Cavity

Reciprocating

Gas Lift

Hydraulic

Electric Submersible

Lift Optimization

Ten Service Lines – Breadth

4© 2008 Weatherford. All rights reserved.Revenues – six months ended June 30, 2008 annualized; may not sum to 100% due to rounding

10%5. Completion

11%4. Drilling Tools

16%2. Well Construction

3%10. Pipeline & Specialty Services

5%9. Integrated Drilling

7%8. Stimulation & Chemicals

8%7. Re-Entry & Fishing

8%6. Wireline

15%3. Drilling Services

16%1. Artificial Lift

Ten Service Lines – Relative Size


• Trailing Eight Quarters:

– 45% revenue growth 75% from international markets

– 43% EBIT growth 98% from international markets

($ in millions, except EPS)

Historical Operating Results

Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08

Total Revenue 1,539 1,696 1,808 1,852 1,816 1,972 2,192 2,196 2,229

North America 840 953 956 1,006 883 995 1,053 1,090 1,012

Europe/West Africa/CIS 205 215 232 245 291 308 345 348 390

Middle East/North Africa/Asia 315 354 409 395 435 456 538 522 556

Latin America 179 174 211 206 207 213 256 236 271

Net Operating Income 303 363 402 420 341 423 472 490 433

North America 222 281 275 300 192 264 257 292 224

Europe/West Africa/CIS 45 46 47 55 70 78 91 93 99

Middle East/North Africa/Asia 61 71 98 84 97 104 132 121 131

Latin America 34 28 46 49 46 45 63 61 58

Research & Development (37) (38) (37) (41) (41) (43) (44) (43) (44)

Corporate (22) (25) (27) (27) (23) (25) (27) (34) (35)

Net Income from Continuing Operations 190 236 267 287 235 298 345 351 300

Diluted EPS from Continuing Operations 0.27 0.34 0.38 0.42 0.34 0.43 0.50 0.50 0.43


Revenue Growth – Revenue Per Rig

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

$907

$764

North AmericaInternational

$3,997

$1,949

H1

(thou

sand

s)


$0

$50,000

$100,000

$150,000

$200,000

$250,000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Efficiency

Revenue per employee (average employee base beginning and end of period)

EBITDA per employee

$103,333

$221,257

$19,750

H1

$63,166


1999 2000 2001 2002 2003 2004 2005 2006 2007 H1 2008

EBIT Margin 5.6% 10.0% 17.1% 12.7% 11.2% 12.9% 15.9% 21.0% 21.1% 21.9%

Net Income Margin 1.3% 4.5% 9.2% 6.6% 6.7% 8.3% 10.8% 13.7% 14.9% 15.5%

Margins

0%

4%

8%

12%

16%

20%

24%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008H1

H1 200821.9%

H1 200815.5%


Net Debt / Capitalization

~ 34.6%

Repurchased 17.6 million

SharesSince

March 2006

($ in millions)

June 07 December 07 March 08 June 08

Assets

Cash 116 171 626 268

Accounts Receivable 1,740 1,962 2,105 2,111

Inventories 1,516 1,608 1,768 1,909

Other Current Assets 504 731 602 639

Total Current Assets 3,876 4,472 5,101 4,927

Fixed Assets 3,491 4,154 4,583 4,980

Goodwill, Net 3,240 3,358 3,455 3,511

Other Assets 1,122 1,207 1,345 1,379

Total Assets 11,729 13,191 14,484 14,797

Liabilities & Shareholders' Equity

Current Portion of Debt 268 774 193 50

Current Liabilities 1,245 1,428 1,468 1,399

Long-Term Debt 3,072 3,066 4,564 4,540

Long-Term Liabilities 529 516 568 639

Shareholders' Equity 6,615 7,407 7,691 8,169

Total Liabilities/Shareholders' Equity 11,729 13,191 14,484 14,797

Balance Sheet


2008 Capital Commitments

• Technology

– R&D Spend: $195 million (~2.0% of revenue)

– H1 2008 Acquisition Spend: $131 million (~1.3% of revenue)

– Total Investment: $326 million (~3.3% of revenue)

• Capital Expenditures*

$ 550 millionNorth America

$ 2,200 millionTotal

$ 50 millionCorporate / Other

$ 800 millionMiddle East / North Africa / Asia Pacific

$ 300 millionEurope / West Africa / CIS

$ 500 millionLatin America

* Estimates

73% International


0%

4%

8%

12%

16%

20%

24%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008H1

Returns

H1 200820.0%

H1 200812.7%

H1 200810.9%

1999 2000 2001 2002 2003 2004 2005 2006 2007 H1 2008

Return on Capital 2.5% 5.8% 10.8% 6.8% 5.6% 6.9% 9.6% 15.7% 13.6% 12.7%

Return on Assets 2.1% 4.4% 8.4% 5.7% 4.8% 5.9% 8.1% 13.1% 11.4% 10.9%

Return on Equity 3.8% 9.7% 20.5% 13.1% 9.8% 10.3% 12.8% 20.8% 19.6% 20.0%


Forward View


North America Outlook

• Secular forces in the market

– Shale

– Heavy Oil

– Deepwater

• Mid-single digit annual market growth

• Weatherford should grow above the market rate

– Young technologies

– Strong in shale (directional, evaluation, completion, stimulation)

– Strong in heavy oil (directional, completion, artificial lift)

– Strong in deepwater

▪ Legacy (tubular running, cementation, line hangers, fishing, proprietary drilling tools)

▪ Higher end technologies (directional, wireline, completion)


E&P Spending**WFT*

*Six months ended June 30, 2008 annualized

International – Most Growth Opportunities

North America47%

Latin America12%

Eastern Hemisphere41%

North America30%

Latin America12%


* * Lehman – June 2008 Survey


International Competitive Requirements

• Breadth = Client Relevance, Economies of Scale and Solutions

• Depth = Technology

• Infrastructure = Reach


Drilling Services

Directional Drilling

MWD

LWD

Rotary Steerable

Underbalanced

Managed Pressure

Coiled Tubing Drilling

Drilling with Casing

Wireline

Open Hole Wireline

Geoscience

Surface Logging

Core Evaluation

Cased Hole Wireline

Slickline

Well Construction

Tubular Running

Cementation

Liner Hangers

Inflatables

Expandable Solids

Re-entry & Fishing

Casing Exit

Fishing

Thru-Tubing

Drilling Tools

Drilling Products

Rentals

Integrated Drilling

Contract Drilling

Integrated Management

Completion

Completion Tools

Sand Screens

Expandable Screens

Intelligent Completion

Fiber Optic Sensing

Field Optimization

Stimulation & Chemicals

Fracturing Services

Production Chemicals

Coiled Tubing

Pipeline & Specialty Services

Pre-commissioning

Inspection

Artificial Lift

Progressing Cavity

Reciprocating

Gas Lift

Hydraulic

Electric Submersible

Lift Optimization

Ten Service Lines – Breadth


Depth – Technology Additions

• Across all Product and Service Lines

• Examples shown from:

– MWD/LWD

– RSS

– Directional Motors

– Open-hole Wireline

– Cased-hole Wireline

• Examples focus on:

– Adding more sensing capabilities on “new” directional & wireline platforms

– Pushing the performance envelope


MWD/LWD – Technology Developments

• 4 ¾” MFR-Ultra 80” – Q4 2007 (MENAP)

– Deep reading resistivity in geosteering applications

– 165°C

– 30,000 psi

• Azimuthal (“Focused”) MFR – Q4 2008 (US)

– Azimuthal resistivity used in geosteering applications

– 165°C

– 30,000 psi

• Resistivity Imaging Sensor – Q2 2009 (MENAP)

– Unique to Weatherford

– Electric imaging tool providing 3-D image of borehole

– Designed to work in water and oil based muds

– Competition’s tools only work in water based mud

• 6 ¾” SAGR – Q1 2008 (MENAP)

– Spectral, Azimuthal, Gamma Ray

– Unique to Weatherford

– Reads chemical content of shale formation

– Provides rock description



• New Generation Ranging Method – Q3 2009 (NAM)

– SAGD applications (steer well parallel to existing well)

– New generation ranging tool

– Key in heavy oil

– Improved accuracy

• Intelli-Pipe Interface – Q2 2008 (LAO)

– Continuous real-time communications

• GABIS II - At Bit Sensors – Q3 2008 (NAM)

– Gamma and inclination measurements below the mud motor (speed of sight)

– Key in unconventional resources (CBM)

• TVM - 3-axis vibration sensor – Q1 2008 (MENA / EWACIS)

– Drilling efficiency measurement

– Provides measurements ranging from 0 – 200 g’s and downhole RPM



• Pe (AZD) Evaluation – Q4 2007 (MENAP)

– Photo-electric measurement in density tool

– Log evaluation measurement

• Sonic – Q4 2008 (US / EH)

– Improved data correlation and measurement quality

• Formation Pressure Tester – Q2 2009


• Automated Drilling Mode (“cruise control”) – Q3 2008

– Automatic maintenance of inclination and azimuth

• Integrated ERT motor power section – Q3 2008

– Runs rotary steerable with power section

• Vertical Drilling System – Q4 2007

– Standalone point the bit system (No MWD required) – Q1 2008

– Standalone push the bit system (No MWD required) – Q4 2008

• New (industry first) HPHT RSS System – (US / EH)

– 175°C and 30,000 psi

– Highest pressure and temperature ratings in industry

• Next generation rotary steerable system – 2009

RSS – Technology Developments


RSS – Technology Developments

• Dual Pulser – Q3 2008 (US / MENAP)

– Can run two pulses in BHA; can run RSS & LWD pulsing; removes problem of hard wired motor

– To allow incorporation of a mud motor in the RSS BHA with full control

▪ Improved reliability vs. wired motor, EM short hop or acoustic

▪ Increased data rates

• Torque Mitigator – Q4 2008 (US / EH)

– Provides the ability to operate under extreme drilling conditions where stick slip is an issue

• EM HEL RSS underbalanced application – 2007 (Global)

– Unique to WFT


Motor Technology Developments

• Mechanical Vertical Drilling Tool – Q4 2009 (NAM)

– Eliminates need for RSS

• Continuous Coil Tubing Orientator System – Q1 2009 (NAM)

– Provides a means of continuously orienting the bend in the motor to steer the well in 3 dimensions

• 11 ¼” Performance Motors – Q1 2008

– Significantly improved drilling performance

• 4 Degree Bent Housing Motor – Field Proven, Best in Class

– For short-radius directional work

• ERT Power Sections – Field Proven, Best in Class

– Improved rate of penetration


• Compact Micro Imager – Q2 2008 (2.4” pads in Q1 2009)

– Real Time and Memory

– Acquires excellent formation images to be obtained in broad range of boreholes

• Oil Based Mud Imager – Q3 2008

– Real Time only

– Allows excellent formation images to be obtained in OBM wellbores

• Ultrasonic Micro Imager – Q2 2008

– Real Time only

– Provides another method for acquiring formation images

– Reduces drilling risk by providing geomechanical, wellbore stability and stress analysis

Open-Hole – Technology Developments


• Array Induction – Advanced Formation Density – Q2 2009

– Real Time only

– Resistivity / Density / Neutron Platform for basic log evaluation

– Multiple depth of investigation, improved resolution with deeper reading for resistivity

• Reservoir Evaluation System (RES) – Q2 2009

– Real Time only

– Provides direct measurement of formation and fluid properties of the reservoir

– Improved accuracy of formation properties for permeability, fluid gradients

– Down-hole lab analysis for fluid properties evaluation (unique)

– Mini DST / Interference testing

• Compact Dipole Sonic – Q3 2009

– Real Time and Memory

– Complete geophysical, petrophysical, and mechanical properties evaluation service

Open-Hole – Technology Developments


• Memory Pulsed Neutron (MPND) – Q2 2008

– Memory

– Formation evaluation behind casing includes reservoir monitoring

– Flexibility: E-Line, Slickline, or CT conveyed

• Mechanical Cutting Tool – Q3 2008

– Real Time with future Memory capability

– Severs 2 3/8” & 2 7/8” tubing without the use of explosives

– Reduces NPT by allowing multiple cuts in a single run

• Direct Pump Setting Tool (DPST) – Q3 2008


– Direct replacement for competitor’s setting tool; uses electro-hydraulics to set plugs and packers without the use of explosives

– Reduces NPT by allowing multiple plugs to be set by significantly reducing surface preparation time between runs

Cased-Hole – Technology Developments


• Mechanical Cutting Tool – Q1 2009


– Severs 3 ½”, 4 ½” & 5 ½” tubing without the use of explosives

– Reduces NPT by allowing multiple cuts in a single run

– Reduces HSE risk by eliminating dangerous explosives and chemicals normally used to sever down hole tubulars

• Cased Reservoir Evaluation (CRE) – Q2 2009

– Real Time

– Advanced formation evaluation behind casing

– 5 detector configuration provides enhanced measurement for formation evaluation

– Water saturation analysis, C/O analysis, density analysis, sigma analysis

– Enhanced gas analysis for unconventional reservoirs

Cased-Hole – Technology Developments


North America50664

38%

Service LocationsManufacturing Facilitiesof Employees

Latin America108

716%


Asia5932

8%


Middle East/ North Africa554

20%


Europe / W Africa81 21

18%


International303 Service Locations64 Manufacturing Facilities

International303 Service Locations64 Manufacturing Facilities

Weatherford locationsRegional officesCorporate headquarters

Infrastructure

Additions 2008-200917 Service Locations3 R&D Facilities5 Training Facilities

Additions 2008-200917 Service Locations3 R&D Facilities5 Training Facilities


Implications for the Future

• Shift in geographic exposure

• Shift in product and service mix

• Margin and return expansion


TargetedCurrent Revenue*

*Six months ended June 30, 2008 annualized

Geographic Shift

North America47%

Latin America12%


North America30%

Latin America15%


2008 2012


Service Line Shift

• Well Construction

• Artificial Lift

• Drilling Services

• Drilling Tools

• Completion

• Re-Entry & Fishing

• Wireline

• Stimulation & Chemicals

• Integrated Drilling

• Pipeline & Specialty Services

• Drilling Services

• Well Construction

• Artificial Lift

• Completion

• Integrated Drilling

• Wireline

• Stimulation & Chemicals

• Re-Entry & Fishing

• Drilling Tools

• Pipeline & Specialty Services

20122007

≈


Margin and Return Expansion

• Technology intensity

• Economies of scale

• Efficiencies at delivery point

– Evaluation

– Drilling

– Intervention

– Production

• Best in class earnings per share growth


This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 concerning, among other things, the prospects for Weatherford’s operations which are subject to certain risks, uncertainties andassumptions. These risks and uncertainties, which are more fully described in Weatherford International Ltd.’s reports and registration statements filed with the SEC, include the impact of oil and natural gas prices and worldwide economic conditions on drilling activity, the demand for and pricing of Weatherford's products and services and domestic and international economic and regulatory conditions. Should one or more of these risks or uncertainties materialize, or should the assumptions prove incorrect, actual results may vary in material aspects from those currently anticipated.

© 2008 Weatherford. All rights reserved.

[email protected]:713-693-4136Direct:713-693-4000Main:

Houston, Texas 77027515 Post Oak Blvd., Suite 600Weatherford International Ltd.Senior Vice President & Chief Financial OfficerAndrew P. Becnel

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