Good morning. My name is Laurie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Weatherford International Third Quarter 2014 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator instructions) We ask that you please limit yourself to one question and one follow-up then reenter the queue for any additional questions that you may have. As a reminder, ladies and gentlemen, today’s call is being recorded. Thank you. I would now like to turn the conference over to Mr. Bernard Duroc-Danner, Chairman, President and Chief Executive Officer. Sir, you may begin your conference.

Thank you. Good morning, everyone. As usual, with prepared comments from Krishna, Dharmesh and then myself, then we will go to Q&A. Krishna, please?

Thank you, Bernard and good morning everyone. I would like to remind our audience that some of today’s comments may include forward-looking statements and non-GAAP financial measures. Please refer to our third quarter press release for the customary caution on forward-looking statements and a reconciliation of non-GAAP to GAAP financial measures. My comments are going to address the third quarter of 2014 and then the outlook for the fourth quarter. Earnings per share for the third quarter before charges and credits were $0.32. These earnings were negatively impacted by $0.02, $0.01 due to the North Iraq geopolitical situation and $0.01 due to the intra-quarter divestiture of the rigs business in Russia and Venezuela and the pipeline of specialty services business. Adjusting for these items, our normalized earnings per share were $0.34. Revenue of $3.9 billion for the quarter increased 4% sequentially and 8% excluding the impact of the divested businesses in both quarters. Operating income margins, before R&D and corporate expenses, improved 145 basis points sequentially to 15.4% and rose 228 basis points versus the third quarter of last year. Incremental operating income on the sequential revenue increase was 48% and on a year-over-year basis, it was 169%. North America revenue grew 9.3% sequentially, with margins increasing by 92 basis points to 16.1% reflecting the seasonal rebound in Canada and strong growth on U.S. line more than offsetting cost headwinds in the U.S. pressure pumping business. The Europe, Caspian, Sub-Sahara Africa, Russia revenue, excluding the revenue of the divested businesses in both quarters, was basically flat, while margins increased by 497 basis points to 21.8% reflecting the strong seasonal recovery in Russia activity coupled with the beneficial impact of divesting the marginally profitable land rigs business with the large reduction in revenue. The Europe continued its strong activity and in…

Thank you, Krishna and good morning everyone. Three important milestones were accomplished during the third quarter. Firstly, operations delivered core revenue growth of 8% sequentially. Secondly, overall operating margins expanded to 15.4% and core margins expanded to 18%. Thirdly, there was continuous progress demonstrated on safety, quality, and other key efficiency metrics. Core growth. The growth is a result of the technology portfolio at Weatherford and our focus on commercialization of that technology. Key drivers behind the sequential growth are as follows. Completions growth was driven by a 22% increase in the number of zones completed in the third quarter versus the second quarter and a 340% increase in sales of TruFrac, our new composite bridge plug technology. Wider scale adoption of our sand control technology was also a significant contributor and will yield a 60% growth year-over-year in 2014. Completions growth was broad-based with sequential revenue growth of 27% in land and 17% in international markets. Artificial lift growth of 9% was driven by the broad technology applications in our production systems portfolio. There are four factors driving the growth. First, our industry-leading platform with specific applications for sand tolerance, corrosive environments and wells with high gas oil ratios provides a differentiated solution set to our clients and provides the fuel for continued growth. Second, we are able to deploy solutions that increase the well productivity of our clients. In the Bakken, we have demonstrated a 25% increase in oil production in horizontal wells with the use of our long stroke pumping units. What is even more important is that the production increase appears to be a sustained increase as opposed to a temporary rate acceleration. Third, we are able to have an impact on the economics of shale wells. Slowing down the decline curve in the first 12…

Thank you, Dharmesh. Q3 was a solid quarter. North America delivered half the quarter’s sequential increase primarily Canada. International did the same, but on the 183 basis point margin increase sequentially and 191 basis point increase year-on-year for international as well. International operating income margins at 14.8% are only 130 basis points below North American’s 16.1%. International is catching up with North America, which is a long-awaited beginning of a recovery. Both have some distance left to go. The prior peak was the same for both at about 25% operating income margins, there is another 10 percentage points or so to achieve. As both Krishna and Dharmesh mentioned the core product lines grew by 8% sequentially with the core operating income rose to 17.9% from 16.5% in Q2. I will add another consideration, absent U.S. stimulation in Q2 – in Q3 the core product lines grew by 9% sequentially to $2.9 billion, while the core operating income rose 200 basis points to 20.1% from 18.1% in Q2. Both the rate of growth and margin increase was steep and ex-stimulation the core crossed the 20% line in Q3. These other product lines, service lines and cross integration we focused on with intensity and single purpose. All of us believe we had head room and momentum in this core to substantially increase volume of business and raise our profitability. This will be more self-evident when we finish curtailing areas of problems and we complete our divestments. Until then we have some measure of distractions and inefficiencies including on the cash side but they are fast diminishing. We have made much progress. The current level of oil pricing is lower than it was recently as a few months ago to state the obvious. It remains viable for our industry while tonic for the…

(Operator Instructions) Your first question comes from the line of James West of ISI. Your line is open.

Hi, good morning gentlemen.

Good morning Jim.

Hi Jim.

As we think about the divestiture program and great color there on we will see another divestiture in the next – in the near-term maybe the next week be announced, I know you have stated you are in progress on testing and production and the drilling fluids, so I am assuming that’s one of those, but where do you stand with the wellheads business at this point. And then the other of those two that you are in progress on that may not be announced here shortly?

James, this is Krishna. So, yes we have a number of projects, divestiture projects ongoing right now. There is about three going on right now. One, we should be imminently announcing hopefully within the next week. And the other two will – it depends on how they progress. Now, the wellheads is not part of these three. The wellheads we announced earlier that we are going to defer it into 2015.

Okay. Okay, got it. And then you, in addition I guess the separate question for me maybe Bernard or Krishna for the core business if we exclude kind of market share gains, which does seem like you have picked up recently in your core businesses, what’s the secular, the normalized growth rate you think of those businesses?

That’s a difficult question, James, because there are some markets where it is – many of those cores are underrepresented. So, you have to slice it. But I would say that it’s not unreasonable to expect if we do a proper job of it, very focused on the cores, for the growth rate of the cores to exceed the underlying market rates by a factor of 5% or 10% per annum for a few years, something like that.

Okay, great. Thanks, Bernard.

Your next question comes from the line of Jim Wicklund of Credit Suisse. Your line is open.

Good morning, guys.

Good morning, Jim.

There is no question you have made a great deal of progress. And more importantly, the pre-open indication for your stock has moved up through the entire conference call. That’s always positive. The biggest issue though that everybody is looking at is your generation of free cash flow. And Krishna, I am not very smart. So, I need some help here. I have got you shown about negative $665 million and you say you are going to generate $500 million in Q4. And if you could just reconcile that for me and I understand the Zubair billing issue, but Zubair was delayed for a while. Is that the primary reason for the shortfall in Q3?

Whether to – Krishna, answer first and I’ll add some comments to it.

Right. So, first, the GAAP free cash flow is $665 million negative – the $666 million, actually negative year-to-date, but that includes $253 million, which was the payment for the U.S. government fine. So, when you exclude that you are much closer to the low $400 million, which is what we are referring in our calls. We don’t consider the U.S. government payments to be part of operations at all, right.

In my comments, I reminded everyone that we don’t exclude much of anything in free cash flow. It’s a very pure definition. The only thing we do exclude is acquisitions, divestitures, the U.S. government and principal payback, that’s it. Okay, go on, Krishna, please.

So, that’s why, year-to-date September, we are like negative $400 million and a bit, and we are targeting to generate $500 million in Q4 alone and that will get us to about $100 million positive for the year, which like we said on the call is not stellar. We are getting our act together on the free cash flow gradually over the years, but the year-over-year performance is impressive and it’s moving directionally in the right place.

Let me add something to help you calibrate how life will be for us next year. What is the difference between this year and next year aside from the market? The difference is there will not be cash severance payments of about $200 million and some change year-to-date. They were for a good cause, but they just won’t happen again. This is Item 1. Item 2, I hate to load up just one project, because at the end of the day operationally that project is doing well, which is Zubair, but it cost us something like $0.25 billion in self-funding cash, which we will get back when we actually deliver the project late in Q1 to our clients. This is the way the contract was set. So, $200 million of severance or something like that, $250 million on Zubair, something like that, it’s very, very simple, the math. If everything else remains equal, you have about close to $0.5 billion in cash payments for a good cause, which simply won’t be there next year. And so you put these things together and you get a very, very simple picture, a very simple picture on what – on how the future looks like for us. And this is why we feel very safe when we talk about a progression similar in ‘15 versus ‘14, like we had ‘14 versus ‘13. It’s actually quite linear. And we hope to do actually a little bit better than that. I am not sure if that helps.

One last follow-up, Jim, for you, yes, the paralysis in Iraq is what caused Zubair cash to move into Q1?

That’s very fair.

It was supposed to come in Q4 and it had moved from Q4 into Q1 because of the paralysis.

Yes, that’s very fair. Thank you for that, Dharmesh. Yes, we couldn’t get – our client is operating, so our clients get everything approved by Baghdad. To the extent, there is no Baghdad at the time, nothing happens. Very, very fair also. That’s correct. It wasn’t an operating mishap as much as it was essentially the fact you had no clients for a period of time or rather our clients didn’t have a partner for a period of time, but hopeful that, that helps, Jim.

No, that’s very helpful, because again, I think that has been one of the critical issues. My follow-up if I could, formation evaluation has been the lowest margin part of your core and a 500 basis point improvement sequentially is fabulous. How did you do that?

Dharmesh may want to address it.

Sure. First of all, the lowest part of core is stimulation, but I will address Formulation Evaluation.

I wasn’t counting that, that’s in…

Alright. No, I think that is very – two key factors are driving it. One is we have very low market share as – by any definition. And what we have been able to do really is on the back of the technology portfolio we have enter into new markets that we were not existing in. So we are seeing some traction in parts. For example the U.S. shale plays where we did not exist before. And the second is really market share growth which is we are able to deliver wells in faster time, in record time in harsh environments and we are getting rewarded for that.

I will add something else also which is the flip for what Dharmesh said meaning it’s complementary. We also had, you know this and we also had been – started presence in markets where probably didn’t have a future and with very, very poor utilization we were the lowest ring on the ladder with poor pricing, we got out of those markets. So you have a very, very simple maneuver which is we don’t push where we don’t have no business pushing, we get out of it. So we don’t have negatives. Avoidance of negative does wonders for you. And then on the other hand we push in markets where we actually have natural applications of what we do. What we do is not a concern to me too. What we do is partly a me too and partly very specific sensing capabilities, so which we are rather unique in having but they only are applicable in certain markets. In other words, they are only useful in certain markets. So that’s we have a combination of getting out of the bad and pushing into good. This is why you are likely to see a little bit of momentum around Formation Evaluation on the margins until they cross 15% mark. At which point they at least become honorable in terms of returns. Okay.

I will throw the party at that point. Congratulations guys. Thank you very much. That’s helpful.

Your next question comes from the line of Ole Slorer of Morgan Stanley. Your line is open.

Yes. Thank you. Bernard did I hear you correct, you mentioned $2.9 billion of the $3.8 billion were the core, is that right?

Core without U.S. stimulation, without U.S. stimulation, international stimulation is capped. I was just trying to make a point. So $2.9 billion without U.S. stimulation that’s correct.

And the total core is $3.2 billion.

So without – and that $2.9 billion core you said generated in excess of 28%...?

20.01% to be specific.

Okay, well that’s in excess of 20% isn’t it. So thanks for clarifying that. And you have mentioned I think that pressure pumping was at 1.6%?

Yes, that’s correct. So the only noise in what we just said to be specific that I excluded U.S. stimulation which is 75% of stimulation. And what you are referring to has the whole stimulation in it including the international which does much better than U.S. Net-net U.S. is not doing well.

Okay. And the stimulation will be about 10% of the total revenue something like that?

Something like that.

Okay. So it’s all looking very good the one sort of number that stands out is Middle East, Asia margins at 10.4% which is the way off what I would imagine that you would feel happy about. So could you kind of explain us sort of roadmap assuming that there is no material improvement in pricing or the business environment, what will be kind of realistic scenario to get that to a call it a mid-teens margins in line with our rest…?

It’s depressingly predictable. If you look within MENA, if you look at MENA’s margins, operating income margins of the core in the third quarter it’s actually a little over 20%.

And how much of the revenue percentage will be core out of the MENA?

I would say approximately somewhere around 70%, 75% of MENA is core. The balance is a negative number. Now what is the balance, a lot of it is rigs in the Middle East and they have been – as they were recovering, they have been stopped in their recovery in Q3 and Q2 by the way also. They have stopped in their recovery. I don’t want to sort of harp on that theme too much, but it happens to be a fact. As Dharmesh mentioned, we have right or wrong, more than a dozen rigs in Iraq, make that 13 we did and they were 100% idle. They were idle throughout Q3. They were actually idled part of Q2. They will be idled probably most of Q4 albeit there is movement. Now, whether we should have as many rigs in Iraq as we do is a very, very I think legitimate question. In a perfect world, the answer is no. Can we have them turnaround to become and be either usefully employed and/or leave the country, yes and yes. But if you look at the negatives that they represented, versus the – they peel out versus the positive. I will tell you again the core product line this is just a fact. In MENA today, in the Q3 had an operating income margin identical, it is what is it, numbers are what they are, a little over 20%. And the issue is simply, one making rigs do well. Two, peeling it off so that they have their own future. Again the notion that I tried conveyed it in my comments, not sure I did a good job of it that the non-cores have a future outside of Weatherford, but they are today not only a cash drain in some instances, Zubair of course, but also a distraction is absolutely true. And the pace and the manner in which we can divest of them intelligently is terribly important for the blossoming of the core. And that is really, you summarize the situation here not in all respects, but in a lot of respects.

So excluding stimulation is there any reason why you shouldn’t exit the first quarter with 20% plus/minus EBIT margin?

Other than seasonality, the answer is no. I haven’t, I don’t know but I have to look at seasonality, we have to look at seasonality. But the answer is no, there is no reason. Krishna you want to comment on that.

In pressure pumping Bernard, would you consider doing a neighbor style deal where you take this – where you maybe you can get access by having this as a minority ownership rather than majority?

I will probably let Krishna answer that question. I would simply say that our team is already extremely busy with the let’s call it the three transactions that we are working on which one I think will be announced and may be two I don’t know before year end, we don’t know. So the issue of what we could or could not do with U.S. stimulation I don’t think has been defined yet, and rather not do it now.

Thank you very much, Bernard.

It’s not defined Ole, but I can tell you that there is a lot of interest on this business. And we have been getting inbounds on that and creative solutions is always better going forward. So we haven’t really paid much attention to it or given it much bandwidth, but we will take it as it comes once we get some more bandwidth to do this.

It sounds good. Thank you.

Thanks.

Your next question comes from the line of Angie Sedita of UBS. Your line is open.

Thanks. Good morning guys.

Good morning, Angie.

So a little bit of follow-up to Ole’s questions on where – you dug in a little bit Bernard on the land rigs and how it was affecting MENA margins etcetera, so can you guys walk us through the land rig IPO or spin, I mean what do you need to see, I would assume you need to see most of those rigs working under some kind of term contract before that could be done, what do you need to see as far as the asset and underlying operations, will you be ready to get the transaction done?

I think first of all you are completely right that ideally, we would have not the whole fleet utilized, probably the idea, but just a high utilization rate in places that have no geopolitical overwhelming issues, good day rates and that sort of thing, good operations also is the one set of issues. This is why we are strengthening the management there that we are announcing the joining of a gentleman to run under rigs this morning as well as our results that’s just part of the process. But we are doing that including the financial side. So this is one set of issues, the operating side. The second set of issues is and I think the whole year go by, so we have audited numbers, so this year and the prior year’s we have got to be coherent in terms of the financial path for what you are going to issue to the public. Presumably the offering would have audited numbers of ‘14, ‘13 and ‘12, but you have that sort of a frame. Also cleaning up the legal structure to make sure that everything is the way it should be as a standalone entity. Happily, from an information systems standpoint that’s the only part of Weatherford, which is essentially on a different platform and the rest of Weatherford for historical reasons. We don’t have to work too much on that. There is the tax aspect also. Want to make sure the company, which will be a multinational company meaning not a U.S. domiciled company also has a proper structure and tax talents and tax planning in place. All of this is really what’s going on today beyond just making sure that we get out of markets, we have no business being in because we don’t have the mass and the presence and so forth, build where we are strong, make sure the equipment is in fine shape, strengthen the management, because this should be a very good company ultimately, but we are not sort of getting rid of it. We are setting them free, so they can have a very good future. That’s the whole point. The fact it doesn’t belong with Weatherford doesn’t mean (indiscernible) they can’t have a good future. So, we are working on all of that, which means that some time, let’s say in March-April, we finish our preparation then it becomes a market issue, Angie. Depends how the market is. We are saying second half, because we don’t know any better, but the reality is we are going to be ready essentially in all respects, let’s say March of next year and then we will see market. Market will be the answer. Hope this is helpful.

Yes, that is helpful. And then I guess I mean, given market conditions and Brent and etcetera, I mean, what we just talked about on the land rigs, has anything changed on the interest in the – obviously you are going to get a deal done soon, but on the other assets that are up for sale where buyers that were there are seemingly pulling back a little bit?

No, we haven’t seen much of that yet, because the fundamentals, Angie, are pretty good in these businesses. So, the odd buyer, yes, but not in general. So, we have three processes like I said going on right now and they are all at various advanced stages. One like I said is imminent and the other two are halfway done. So, no real impact of that yet.

So the other two do you still think that they will be completed in the first half of 2015 or could be unclear?

No, I think that’s a fair estimate. If everything goes perfect, we might even be able to announce one of them this quarter and close in the first quarter of ‘15 and only time will tell about the other one.

What he is suggesting, Angie is that you could have two announced between now and year end is what he is suggesting.

Yes, one like I said is imminent and maybe closed before year end. The other one is announced this quarter and closing probably in Q1 most likely.

So, what he is trying to tell you, Angie, is that we don’t know for sure of course, but two of three might be either closed or announced as in agreement signed for year end.

Okay, that’s perfect. That helps. And then finally, I mean just to go back to your comments in your opening remarks, Krishna, Weatherford historically has always had a quite a bit of charges and after-tax charges and burning through cash, but I mean to go back to your remark, it sounds to me as if you are saying clearly Q3 is as should be the last quarter that we are seeing all this noise on the severance side, etcetera and then Q4 will be a clean number. The only thing you had outstanding of course is Zubair, but this is the last quarter?

Like I said, Zubair and the divestiture costs and any gains and losses on divestitures, that’s it. We just want to be very clear about this. We are very conscious of this issue and we are calling a halt to all of these programs now. We have finished the program, so that’s it.

Great, thanks. I will turn it over guys. Thanks.

Your next question comes from the line of Brad Handler of Jefferies. Your line is open.

Thanks. Good morning guys.

Good morning, Brad.

If you could please specifically – my first question specifically speak to Russia, your position there obviously exiting the rigs and so now it’s a service exposure, but could you layout a bit of a roadmap for what you think your opportunity set there is over the next year or so?

Sure. So, subsequent to the rigs leaving Weatherford in Russia, we have calibrated for you a much smaller presence, which is this year something like $450 million to $500 million worth of service business, pure service – service or products business. That service or products business is quite different from the rigs business that left insofar as it has good margins. It always had good margins. So, we are left with a much smaller region with much higher margin. This is fact number one. Now, fact number two, I am not going to tell you something you don’t know already, which is a combination of ruble that went from 32, 33 to 40, 41, Item 1. Item 2, the sanctions. Item 3, oil basically down by $20, $25 which is very relevant for Russia. All of this put together means that there is no doubt the market in Russia is not as exuberant as it perhaps wanted to be some time ago. You know this already. What does it mean for us, because I think of – I am very respectful of the sanctions of course but because of a – I think of a very good working relationship we have with a number of clients, we are notwithstanding what I just described. We are likely to add as we speak approximately I would say $100 million per annum there give and take but approximately $100 million per annum on let’s say $500 million base of incremental service and products business which should be signed and commenced sometime late this year, so make it a full 2015 event. So for us Russia in ’15 will not be so much a down market. It just won’t be I think as strong of an increase as we had once anticipated. But going from $500 million to $600 million on high margin products and I say higher projects they are all core, while well construction and Formation Evaluation and completions being basically the essence of it. There is not much artificial lift for us in Russia. So that’s the prognosis. Could it be more than that, I think I don’t know I think today I would say it would be rather contend which is – what I just described. It is coming out of essentially of three accounts of which two in particular in Russia.

Okay, that’s very helpful color. I appreciate that. And actually maybe so helpful that maybe I will just ask about a different country. And if you could speak to Brazil please and your prospects for next year, obviously, you have picked up a lot of managed pressure drilling work, it seems kudos to your technologies for that. But there are various – potentially there is a stabilizing here of offshore rig count and I guess I am curious for your perspective on your opportunity for next year there?

Well, I think Brazil and in general the deepwater segment, our markets where ever since we have been able to redirect the company after the end of the great turbulence of ’11 and ’12, we have started scoring. And its not only which you referred to, it’s just well construction in general, tubule running services, liner hangers, cementation, expandables yes and some managed pressure drilling, you are absolutely right. So Brazil is a case in point. Brazil was never a material market for us, it was a piece of market, but it wasn’t a large market. We stayed away from Formation Evaluation completely in that market simply because it was crowd and with low margins. And so we focused on the things that could be useful. It just so happens we have more things that are useful for the other client Petrobras primarily than we used to have. So without getting into any details on what’s the rate of expansion is likely to be for us in Brazil that is let’s say that the largest play today we have in Latin America is actually Argentina, we are close $0.5 billion. Mexico is much smaller. Mexico is not the largest play anymore. Mexico is sort of sitting on the heart of hard idle. So Argentina is about $0.5 billion and I would say Brazil is roughly $300 million. I think you are likely to see some time over the next 12 months Brazil challenge Argentina in terms of leadership for Latin America. It’s all well construction, all well construction and not only which you referred to. If that is – and I probably don’t want to give you anymore color than that. Krishna, do you want to add something?

I would also like to add that in terms of margins, we are helping ourselves quite a lot in Brazil. In our quest for growth in the past we were trying to maintain our business presence in all product lines despite the market already being in drilling services for example being distributed among our peers and we had no market share, but we had a pretty large operating base. So we have shutdown all of those things. So that’s helped the margins significantly along with the well construction growth. So we are now much more focused.

Got it. Thank you, guys. I appreciate it.

I think we are going to – apologies in case of cutting off any further questions. But we will have one more question because we are now a minute past the half hour and there are other calls, other reporting companies, so maybe one last question and then we will stop the call, if there is one last question.

Your next question is from Byron Pope of Tudor, Pickering & Holt. Your line is open. Byron Pope - Tudor, Pickering & Holt: Good morning.

Good morning Byron. Byron Pope - Tudor, Pickering & Holt: Just quickly you provided some useful color on the core business. And I think you framed 2015 nicely in terms of the revenue growth prospects for the core businesses by your geographic regions. I was just wondering if you could frame for us how you think about that 2015 growth in terms of which ones lead the charge among your five core businesses in terms of 2015 top line growth drivers?

It’s pretty easy, because it’s just the dollars are the largest there. Well construction will be – will have the biggest, biggest growth in terms of dollars. And percentage wise, it might actually be challenged by artificial lift, which should have an extremely strong year in 2015 also. So, I would say in dollars, it would be well construction simply because it’s so big for us, the division as a whole, but in terms of our percentage of – percentage growth other than the dollars, lift might actually be neck and neck, the number one. Lift has very, very, very strong backlog going into ‘15 and widespread. Byron Pope - Tudor, Pickering & Holt: Okay, thank you. Appreciate it.

Thank you very much. We will just – we thank you for your time. We will just close the call now.

Thank you.

Ladies and gentlemen, this concludes today’s conference call. You may now disconnect.