Weatherford International plc

Ladies and gentlemen, thank you for standing by. Welcome to the Weatherford International Second Quarter 2021 Earnings Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. As a reminder, this event is being recorded. I would now like to turn the conference over to Mohamed Topawala, Director of Investor Relations at M&A. Sir, you may begin.

Welcome, everyone, to the Weatherford International Second Quarter 2021 Conference Call. I'm joined today by Girish Salikram, President and CEO, and Keith Jennings, Executive Vice President and CFO. We will start today with our prepared remarks, then open it up for questions. You may download a copy of the presentation slides that correspond with today's call from our website's investor relations section. I want to remind everyone that some of today's comments include forward-looking statements. These statements are subject to many risks and uncertainties that could cause our actual results to materially differ from any expectation expressed herein. Please refer to our latest Securities and Exchange Commission filings for risk factors and cautions regarding forward-looking statements. Our comments today also include non-GAAP financial measures. The underlying details and a reconciliation of GAAP to non-GAAP financial measures are included in our second quarter press release, which can be found on our website. With that, I'd like to turn the call over to Girish.

Thanks, Mohammad, and thank you all for joining our call today. We will start on slide three, which highlights our exceptional performance in the second quarter. We came into the quarter with good momentum and I'm very proud of our team for carrying this forward and delivering on all our priorities. Overall, we delivered above the expectations outlined in our last call, kept pace with larger, more diversified industry players, and made significant headway in our efforts to create a business capable of sustainable profitability and free cash flow generation. Generating $48 million of free cash flow in an interest-paying quarter while driving significant margin expansion is a testament to the laser focus on cost and cash we maintain. We have talked in the past about our approach being to plan for flat activity and then take advantage of activity improvements which provide greater fall through. And our Q2 results demonstrate the positive outcome of that strategy. In addition to the financial results, we had several remarkable achievements in safety, which is at the core of our operating culture. We continue to reduce our total incidents and achieved zero recordables in June. As an example of our commitment to safety, I'd like to highlight our Middle East operation where we delivered 10 years of completion operations and 20 years of liner hanger operations without any lost time incidents for a major national oil company. Separately, we are honored to receive the Kuwait Oil Company CEO HSSE Award for logging and perforation services. We saw activity increases across all our geo zones in the second quarter that drove sequential growth. This includes our North America geo zone, which overcame seasonal slowdown in Canada. I am particularly pleased with our EBITDA performance as we delivered an outstanding quarter with EBITDA margins of 15% and improvement of 280 basis points sequentially. We have previously highlighted that 15% EBITDA is a goal for us over the next several quarters, and while achieving at this quarter proves the feasibility of that ambition, we recognize we still have work to do to ensure its sustainability. We did have some one-time items during the quarter, but even without those, our margins ticked up significantly, and we are on our way to sustainably generating 15 plus percent EBITDA margins. Most importantly, our cash performance was terrific, with the company generating $48 million in free cash flow, putting us on track for another full year of positive free cash flow which would be a fairly remarkable achievement. As you are aware, we recently completed the listing of our shares on the NASDAQ Stock Exchange, and we are excited to complete this journey and trade as WFRD. This quarter's results further demonstrate our ability to deliver consistent performance and validate our overall game plan. I would like to take a moment to convey my gratitude to our One Weatherford team members for all their contributions, commitment, and customer focus. Our people are the foundation of our performance, and I am excited about the potential we are unleashing from within our organization. That potential is evident in some of the operational highlights for this quarter. Turning to slide four, an important area continuing to gain commercial traction is managed pressure drilling, or MPD, a discipline we definitely lead in our industry. Weatherford has offered a field-proven, market-leading portfolio of MPD technologies, and services over the course of 50 years and counting. It started with the first rotating control device and it continues with automated solutions such as our Victus Intelligent MPD and next generation of automated risers. There's a growing interest in our MPD capabilities, which combine domain expertise with automation and smart control algorithms to push the boundaries of what our customers can achieve in terms of lowering overall costs and enhancing well integrity. Our new awards Extensions and operational successes showcase our global leadership in this technology. In Brazil, we won our second consecutive drilling contract for a major operator's deepwater campaign, and this marks the first award for our next-generation automated MPD riser system. In addition, we are mobilizing other MPD systems for two offshore drilling contractors there. In Asia, an IOC contacted us after attempting to drill conventionally for 13 days, and falling 1,000 feet short of target depth. MPD enabled the customer to not only reach total depth, but also drill ahead with another whole section for an additional 1,200 feet. We also deployed a Victus MPD solution from a swamp barge for the first time, enabling the operator to reach planned depth in a high-pressure exploration well with a narrow drilling window. In North Africa, an operator awarded us contract extensions for a full spectrum of MPD services including Victus Intelligent MPD and an automated deepwater riser package. This allows us to expand our capabilities to a deepwater gas field in the Mediterranean Sea. And for another customer, we used a nitrogen cap drilling variant of MPD to save 42 days of rig time while also delivering more than 20% production improvement compared to offset wells. As operators face similar drilling challenges across the world, these successes offer powerful validation of MPD technology and the value it brings by addressing challenges beyond the scope of traditional drilling applications. Now turning to slide five. In addition to MPD, there are several other core oil field service technologies that continue delivering success this quarter. These include products and services within our wire line, drilling services, and artificial lift product lines. Our teams accumulated notable wins in multiple geo zones, including displacing competitors leading to major contract wins. These technology achievements demonstrate that we are leading not only in our market-leading product lines, but are also highly competitive in our other core areas. In drilling services, a customer in Russia awarded us a two-year contract which adds to our scope of work with the customer, expands our presence from eight up to 15 rigs, and introduces the Magnus rotary steerable system to new wells. And then for an operator in the Middle East, our drilling services achieved a new field record for rate of penetration and saved the customer 47 hours of rig time, leading to additional work being awarded to us in the offshore field. In another core area, artificial lift, an operator in the U.S. awarded us a fully integrated production pilot program for eight wells in the Permian Basin. We displaced the incumbent by recommending a rod lift solution complete with Rotoflex long-stroke pumping units, Foresight Edge, and Corot Continuous Rod to deliver savings in capital and operating expenses. We also see progress that aligns to our strategic vectors of digitalization and energy transition. According to a contract signed last year with KOC in Kuwait, we launched the first phase of a rig site data management and visualization solution by implementing the Centro software platform and installing a real-time drilling decision center. We also secured multiple contracts to supply production automation solutions for operators in Europe, Asia, and the Middle East. In fact, an operator in the Middle East will exclusively deploy Foresight edge production automation controllers on wells equipped with multiple lift systems across its fields. Additionally, we continue to build a successful track record for our firma plug-in abandonment solution. In Europe, we replaced a competitor to design a custom solution leveraging technologies from our firmer portfolio and successfully delivering 27 wells ahead of schedule. As plug-in abandonment activity grows in the coming years, we believe that positioning ourselves as a service company with a complete solution will enable greater traction and growth in this important activity to ensure sustainability of abandoned wells. Turning to slide six for our view on the market. Like most industry players, we believe the activity increases seen in the second quarter will translate into a broader upcycle for the industry. However, we believe that there will be significant differences geographically, driven by the pace of vaccinations and economic rebound in the face of the virus variants. Despite the growing incidence of cases, we are now more confident in a 2022 growth scenario following continued moderate increases in activity in the second half and Keith will talk more about that in relation to our outlook. In North America, activity was up during the second quarter, with the increase in U.S. activity partially offset by seasonal decline in Canada. With us exiting the drilling services and wellhead product lines in the U.S., our focus remains on profitable growth in North America as we work toward delivering on margin improvement, an area where we are already seeing improvements. On the international side, We are observing an increase in tendering activity, primarily in our Middle East, North Africa, and Latin America geo zones. With over 75% of our business coming internationally, we are very focused on our major countries and supporting customers with their plans as they gear up for production increases. As the OPEC Plus cuts phase out, we are hopeful that the increased production will translate into more drilling campaigns. Additionally, with current commodity prices, we are seeing an uptick in offshore activity, where we have strong technological differentiation. With that, let me turn it over to Keith to provide our financial update.