Weatherford International plc

market share helped us achieve an industry-leading adjusted EBITDA margin expansion of 380 basis points compared to last year. In addition, we also won more than $1 billion of commercial awards during the quarter, excluding Russia, significantly ahead of our 2021 run rate. I am extremely pleased that we are delivering at this level, and I'm truly excited about the growth potential we expect in the second half of the year. Over the past few quarters, we have shared how we have resegmented our business and discussed the successes in our market-leading product offerings across the three segments. While these product offerings of managed pressure drilling, tubular running services, cementation products, and fishing and reentry continue, I wanted to spend some time today talking about the rest of the portfolio and the great strides we are making there. We have refined our portfolio, and it is differentiated by innovation across the board with an exaggerated focus towards specialty services. We have also leveraged the strength in our market-leading product offerings to pull through other offerings in a discrete and integrated fashion. This has helped our customers achieve success in their core oil and gas operations and their energy transition activities. Some of the key commercial highlights from the first quarter are as follows. ADNOC in the UAE awarded us a five-year contract with an optional two-year extension to provide wireline logging and perforating services. We were selected based on our expertise in cased-hole reservoir characterization and monitoring, extensive pipe recovery capabilities, and world-class perforation services. In artificial lift, which has been a traditional strength and boasts a tremendous installed base, we received two awards from Tatvir Petroleum in Bahrain to deliver, install, and service beam pumping units and downhole pumps. In India, Cairn awarded us a five-year integrated artificial lift and production automation contract across its work over and rigorous activities in Western India. The contract, which will commence in the second half of the year, will enable greater production optimization and help drive collaboration between the operator and its service partners. In our completions portfolio, we received a three-year contract to provide cemented liner hangers for a BP-operated business in Azerbaijan with the potential for an increased scope in the future. Superior run-in features combined with our high level of service quality and strong presence in the region were instrumental in securing this award. Supporting our success in the market is the emphasis we have placed on technology expansion in key markets and further innovating in spaces where we have the potential to deliver critical value to customers. For example, we recently formed a collaboration with Subsea Services that will change managed pressure drilling, or MPD, from an add-on to a seamlessly integrated part of the drilling rig. The collaboration will integrate field-proven Weatherford technologies, the rotating control device and the annular isolation device, with a remotely operated pull-in system from subsea services. The result will be an industry-first complete integration of MPD and typical riser auxiliary lines into a single automated connection for all drilling operations. As we continue to drive innovation in this space, we took our more than five decades of leadership in MPD and expanded those capabilities to every part of the well lifecycle with our recent commercialization of managed pressure wells. These new solutions enable our customers to apply the same field-proven technology of MPD to deliver high-quality wells with fewer surprises by ensuring a stable wellbore with a comprehensive pressure management strategy. With robust pressure control capabilities for every weld phase, we increase production while lowering weld construction costs and weld control risks. Following the commercialization of our managed pressure weld solution, we integrated and deployed it on the Maersk Viking Ultra Deepwater Drill Ship, securing the rig's attractive position in the region where MPD capabilities are in high demand. The Maersk Viking is currently drilling with the Weatherford MPD system for a major operator in Malaysia. This integration shows the strategic importance of collaboration with drilling contractors and provides significant MPD benefits to customers. Similarly, in Tubular Running Services, or TRS, we have taken our industry-leading position in field-proven technologies, such as our premier offering of Vero automated connection integrity, and continue to deliver innovative and differentiated technology offerings. Our soloist torque turn monitoring solution is the latest enhancement to our market leading services to enable single person operation and simplified remote viewing while running tubing or casing in the hole. Traditional torque turn monitoring systems require longer rig uptime and personnel must remain near the control cabinet on the rig floor, significantly reducing efficiency. With our SOLOS solution, customers get the same accurate torque monitoring without the hassle of Arjo's rig up, all from a single Wi-Fi-enabled tablet. Our enhanced service offering enables cross-functional work on the rig floor by freeing up personnel to monitor torque while performing other essential rig operations. This enhancement to our service offerings showcases our commitment to investing in innovation and technology throughout our portfolio. It also provides incredible cost savings and safety improvements to our customers, while increasing our margins to drive growth and profitability. We've also focused on leveraging our portfolio to support our customers' energy transition and ESG needs, where we continue to gain traction and prove our ability to adapt to changing industry needs. We've supported geothermal activity for more than two decades, and a recent project on a geothermal well with Hamburg Energy reinforces our competitive advantage. I had the opportunity to personally visit the site a few weeks ago and came away with even greater excitement about the potential for geothermal in the future. We deployed our Magnus rotary steerable system from surface to total depth in the well, drilling all three sections, a first for the system on this well type. We also used market-leading evaluation tools to analyze and log both cased and open-hole sections and cement bonds. This operation is positive proof that our existing market-leading portfolio can help drive the energy transition forward. I'm encouraged by the traction we are seeing in these areas, and I'm confident in our growing role as a service provider of choice. Our unique position in the marketplace is demonstrated by industry-leading and differentiated technologies across the well lifecycle and our ability to deliver integrated solutions to our customers, leveraging those capabilities which separates us from our peers. Now turning to our view on the markets, the multi-year upcycle is firmly underway driven by limited supply and increasing commodity prices. The overall macro environment continues to improve, and we anticipate growing demand for oilfield services from our customers. It is encouraging to note that this cycle has thus far been characterized by the prudent deployment of capital by operators and service providers alike. This portends well for the ability to generate returns, not just over this cycle, but also on a longer-term basis. In North America, we are strengthening our commercial focus to help drive market share and pricing gains. We continue to see strong activity growth and increased customer spending supported by a favorable commodity price environment. However, a combination of capital discipline by public ENPs, global supply chain bottlenecks, and a tight labor market will constrain growth somewhat. For example, as seen in our predominantly product-driven production intervention segment in the U.S., we continue to experience acute supply chain issues. Nevertheless, we still expect to deliver positive top line and bottom line growth as our focus remains on going after work where it makes the most economic sense. We recognize that there has been a significant increase in drilling activity in the U.S. and associated services over the past year. However, we are not chasing previously unprofitable work as we remain committed to our goal of only pursuing activity where we believe we can generate margins across cycles. Turning to international markets, we continue to see the trend of robust growth with increased activity and spending consistent with what we have stated before. As activity increases in the Middle East and Latin America continue to drive international growth, we also see accelerating demand for our products and services and contract awards in Asia and sub-Saharan Africa. We expect the international markets to continue their expansion as we witness capital deployments by a growing number of operators. We have put a significant focus on our Latin America performance, including structure, operations, and business model, and our first quarter revenue growth of 29% year-over-year reflects the excellent progress we have made. I'm also encouraged by the acceleration of activity in Asia and sub-Saharan Africa. These two markets were among the toughest hit during the pandemic, and a natural pent-up demand is being driven forward now. Our focus continues to be on driving directed growth in our key markets and on the work necessary to drive execution excellence as we scale up for growth. Now, I'll hand it over to Keith for our financial update.

Thank you, Girish. Good morning, everyone, and thank you for joining us. As Girish commented earlier, given the headwinds from inflation, logistics, supply chain challenges, and the geopolitical events occurring on the European continent, we are pleased with our first quarter results. My comments on the first quarter will primarily compare the results of the first quarter of 2021. Consolidated revenues were $938 million, an increase of 13%. Our operating income was $18 million compared to an operating loss of $13 million. Net loss was $80 million compared to a net loss of $116 million. Adjusted EBITDA was $151 million, an increase of 48%. Before I go into the details of the reporting segment's performance, I have a few brief comments on the current situation in Russia and Ukraine and how it factors into our current quarter and outlook. We have taken a $19 million charge primarily related to the write-downs of all our assets in Ukraine, excluding cash. Ukraine was 1% of all revenues in 2021 and was included in our original full-year guidance, and the revenue has now been removed from 2022 guidance. In Russia, we continue to operate in compliance with all sanctions and are diligently monitoring this dynamic situation. Consistent with our historical range of 5% to 7% that we have previously disclosed, revenues in Russia were 6% of our total revenues in the first quarter of 2022. Our net book value of our primary assets in Russia, excluding cash and not deducting accounts payable at March 31st, 2022, were approximately $140 million. Our full-year outlook does include Russia, with lowered expectations from our original guidance. Given the ongoing uncertainties, it is difficult for us to comment further. As we discussed in our last call, we continue to focus our efforts on improving our operations profile. We believe we can structurally improve our margins by consolidating manufacturing plants and relocating the key nodes of our global repair and maintenance facilities. This is intended to achieve a more efficient infrastructure to provide excellence in product and service delivery, leading to increased customer satisfaction and growth. As such, we have recorded a restructuring charge of $20 million during the quarter, primarily for this initiative. Now let's look at our segment breakdown. During the first quarter, Drilling and Evaluation, DRE, revenues of $292 million increased by $56 million, or 24% year-over-year, largely due to higher demand for managed pressure drilling and wildline services, primarily in Latin America and the Middle East, North Africa, and Asia. Segment-adjusted EBITDA of $59 million increased by $30 million, or 103% year-over-year, primarily due to higher demand for managed pressure drilling and drilling services, mainly in Latin America. Well construction and completion WCC revenues of $344 million increased by $21 million, a 7% year-over-year increase, primarily due to higher demand for cementation products and activity in North America. Segment-adjusted EBITDA of $67 million increased by $17 million, or 34% year-over-year, mostly due to higher demand for cementation and completion products with improvements primarily in the Middle East, North Africa, and Asia. Production and intervention, PRI, revenues of $286 million increased by $27 million, or 10% year-over-year, due to higher demand for intervention pressure pumping services, primarily in the Middle East, North Africa, Asia, and Latin America, respectively. Segment-adjusted EBITDA of $39 million decreased $2 million, or 5% year-over-year, mainly due to higher logistics costs and supply chain challenges, which impacted our delivery schedule for products in North America. This was partially offset by activity improvements in the Middle East, North Africa, and Asia. Turning to liquidity and cash flow. We closed the first quarter of 2022 with total cash of approximately $1.1 billion as of March 31, 2022, down $57 million sequentially. Unlevered free cash flows of negative $47 million was down 194 million sequentially, and free cash flow of negative 64 million was down 113 million versus the fourth quarter of 2021, primarily due to working capital requirements. The characteristics of an up cycle are reflected in our first quarter working capital requirements, as cash flow swung by approximately 140 million versus the first quarter of 2021. However, we are confident in our team's ability to pace our working capital requirements with our operating performance to capture positive earnings and continued margin expansion in this cycle. While we continue to invest in our business, we remain committed to utilizing our asset base more efficiently. As such, the timing of capital investments may flex between forecast periods. Shifting our focus to the current year, I will share some of our qualitative thoughts on the second quarter of 2022 and the full year. As we look ahead to the second quarter, versus our first quarter of 2022, we expect consolidated revenues to increase by mid to high single digits, driven by higher growth across all our geomarkets. Across the segments, DREs forecasted to deliver mid single digits growth, WCC to deliver in the mid to high single digits, and PRI in the high single digits. Adjusted EBITDA margins are currently expected to be 16% to 16.5%. Unlevered free cash flow is expected to be positive. We are targeting break-even free cash flow under our current activity forecast, which could turn negative if the indications for activity levels in the second half of the year exceed our current expectations. We expect CapEx to be in the range of $30 to $40 million in the second quarter. Full-year 2022 consolidated revenues are expected to grow by high single to low double digits above 2021 levels. Across the segments, DRE is forecasted to deliver low teens growth, WCC to deliver in the high single digits, and PRI in the mid to high teens. Consolidated adjusted EBITDA margins are expected to be 16% to 17% as we continue to expect margins to expand by at least 50 basis points for the full year of 2022. As noted in our fourth quarter remarks, CAPEX will be at least double 2021 spending and will range from $175 million to $200 million. Full-year free cash flow is still expected to decline compared to 2021 as increases in net working capital, cash taxes, and CAPEX driven by an increase in activity will only be partially offset by lower cash interest payments for the year. we still expect to generate positive free cash flow for a third consecutive year, which we expect to come mainly from the second half of 2022. This outlook incorporates the impact of changes for Ukraine and Russia previously commented on. Notably, this outlook reinforces the strength of our franchise and the broadening of the increasing demand for oil fuel services, which has enabled us to maintain our original guidance by already offsetting this impact with demand from our other regions. Thank you for your time today. I will now pass the call back to Girish for his closing comments.

Thanks, Geet. We are excited about our growth prospects as we continue to see strong macro trends and are gearing up on our commercial focus to drive pricing and share gains in the coming quarters. And I want to update you on our 2022 focus areas, which will continue to drive rigor and discipline across the organization. We are on a multi-year journey to evolve our fulfillment mechanisms. Currently, each product line has a fulfillment network that has developed independently over several years. We are moving away from that and rethinking our inventory, supply chain, and logistics functions as we contemporize our network to serve customers more efficiently. Throughout the quarter, we continued the work of evaluating our business and making critical and essential changes that resulted in a one-time restructuring charge to help us evolve our operations further and create efficiencies in our organizational structure. We have been very clear that we treat restructuring as an investment and have a roadmap to drive improvements over the coming quarters and years. In our directed growth focus area, we are leveraging our technology differentiation, increased investment in innovation, and the value proposition to drive pricing and market share growth where it makes economic sense. Rather than pursuing share at a global level, we are focused on areas of critical mass and driving the intersection of geography and product line to have each be economically independent. Our third focus area is excellence in execution, a critical component of supporting our growth. We've built a new quality function to instill the discipline and accountability needed to execute with a lean mindset throughout our enterprise. Finally, simplification remains an enduring focus area for our company. We continue to evaluate our organizational and operational structure to maximize efficiencies. We believe, like our peers, that we are in a multi-year upcycle driven by global energy security concerns and economic growth. While there are clear risks posed by inflation, increasing interest rates, supply chain bottlenecks, isolated with serious COVID-19 lockdowns, and geopolitical conflict, we believe energy security and supply will remain a focused priority. As a result, we should see further momentum in the second half of 2022 and 2023. Weatherford's unique position in the marketplace creates a competitive advantage that will allow us to capture additional market share and to successfully deliver on our goals of sustainable profitability and positive free cash flow. Thank you for joining us today, and with that, operator, let's please open it up for Q&A.