Good morning. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Weatherford International First 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. 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. We will go through same structure as we did last time, which is Krishna will say few words, Dharmesh will then I will speak and then open it to questions afterward. Krishna, why don’t you get started?

Thank you, Bernard, and good morning, everyone. I would like to remind our audience that some of our today’s comments may include forward-looking statements reflecting Weatherford views about future event and the potential impact on performance. These matters involve risk and uncertainties that could impact operations and financial results, and cause our actual results to materially differ from our forward-looking statement. Our comments include non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are included in our first quarter press release. My comments are going to address the first quarter of 2014 and then the outlook for 2014. Reported net loss on a GAAP basis for the first quarter of 2014 was $41 million or $0.05 per diluted share. After-tax charges for the first quarter were $140 million, which included $71 million of severance and exit costs related to our workforce reduction and the shutdown of loss making operation -- operating locations in certain markets, $47 million associated with our legacy lump sum contracts in Iraq, principally the Zubair EPF contract, $22 million of professional fees and other costs, largely associated with our divestiture program, year end income tax material weakness remediation and our previously announced redomestication activities. This is the last quarter we will incur cost for the remediation of the income tax material weakness. Non-GAAP earnings per share for the first quarter before charges was $0.13, revenue of $3.6 billion for the quarter was down 4% sequentially and 6% lower than the first quarter of 2013, reflecting mainly three issues. The impact of activity stoppages due to unusually severe winter weather conditions in Russia and on land in the United States. Normal seasonal weather related declines in the North Sea, China and Australia, and reductions in activity in Latin America driven by our capital discipline…

Thank you, Krishna, and good morning, everyone. The first quarter is a very constructive quarter and established the solid foundation that will drive revenue and earnings growth for the remainder of the year. Accomplishments for the quarter are as follows. Significant progress was made on the cost reduction initiative during the quarter. From an operation perspective the focus was to increase efficiencies and reduce cost at the same time. We have standardized the support origination so that we have similar support structures in small, medium and large countries. This should enable us to stay efficient as we grow again. The effort involve in eliminating 4,307 positions to-date has been significant. The benefits will come in the quarter and years ahead. The main area of focus has been to identify location, where we do not have a competitive advantage and exit from some of the businesses in those locations, exit the business in some of these locations will not only eliminate future loses but will also allow the origination to increase intensity and focus on areas where we can grow our profitability. After a comprehensive review of our global service footprint 50 such locations have been identified, action to shutdown 20 locations began in the first quarter, with the rest plan to be shutdown in the second quarter. While these collective actions will be involve some one-time severance and restructuring costs, the end result will be a leaner and better company, better equipped to deliver revenue growth and better margins. And last but not the least, at the end of the first quarter after comprehensive review we had one of the strongest pipeline of projects and contracts in recent times and this time across almost every major region of the world, resulting growth in the core segments will have material impact…

Thank you Dharmesh. I had my own synthesis to the first quarter. I made the following comments. North America's quarter was lower than expected in parts where we had weather issues. But weather wasn’t the whole story. With our own Weatherford specific dynamics, the employment reduction took place early in the quarter. This was very distracting until the process was already at quarter’s end. Separate and distinct from weather in Weatherford dynamics, U.S. activity in January and February was a sleek for like of a better term and for no discernible reasons. The transition to March was all the more intense. Activity in our own successes rallied very strong in March and has since gone from strength to strength. Our U.S. run rate in March exceeded all our expectations, a combination of self-help and strong market reaction. Latin America had lower revenues coming out of Mexico and Venezuela with much higher overall margins. A large contract with thin profitability was completed lowering Mexico’s revenue by about 30% for the year. The remaining business mix in Mexico with higher margins, rising performance in Argentina is also to be credited for higher operating income. Eastern hemisphere went to a seasonal low. It was very sharp in Russia and particularly low in the North Sea and some areas of Asia-Pacific. The sharp seasonal downturn marked positive financial developments. As Dharmesh observed, we made progress in Sub-Sahara Africa and to a degree in MENA. In fact, Q1 showed record financial results for SSA. Sub-Sahara Africa was pretty much a factor as Weatherford is becoming one. The sequential margins in eastern hemisphere rose from Q4 to Q1 which is encouraging. This reflects both our large head room in eastern hemisphere, given very low levels of margins coming out of ‘13, also reflects the seasonal financial…

(Operator Instructions) Our first question will comes from the line of Jim Crandell with Cowen.

Thank you. And thanks for all the information. Bernard, some of your comments toward the end I didn’t get them but what is your expectation now for run rate for operating margins by the end of the year and how will that vary between the different geographies?

I think overall, this is now referring to the core, let's assume that we are only talking about the core. The timing of the non-core is difficult to know. By Q4, the core overall should run at 19, 1-9, or there about operating margins. And by operating margins, we are clear on the numbers being used, are always before corporate and R&D. Corporate and R&D represents roughly 2% of revenues, okay. Krishna, you may want to add to that. Krishna may want to add to that.

Yes. Thanks, Bernard. Overall, margins for the business including non-core businesses, we are forecasting to reach between 16% and 17% in the second half of the year, which includes 19% for the core businesses that Bernard talked.

And the comment I added in the few words that I read, 19, there is a case to be made concurrently that both Dharmesh and I look at, which is the core should be around 19%, it may test 20 but then again, we will see.

And on the revenue improvement Q1 to Q4, Bernard?

Sorry.

I said and you also commented on, I think the revenue improvement for the core businesses Q1 through Q4.

Actually, when I just gave the year-on-year for the core which is even usually simpler, which is the cost will go roughly at 10%, ’13 on ’14, the overall core which is I think reasonable given what we have.

It seems, Bernard that by taking into account cost-cutting, your margin expectations, the increase in revenue that it’s reasonable to think you could be at a $2 a share run rate by the fourth quarter?

I’ll let Krishna answer that.

I think we will be in good shape to get close to that, yes.

Our internal forecast point towards that direction, absolutely.

Great news. Okay. Thank you very much, guys.

Thank you, Jim.

Your next question will come from the line of James West with Barclays.

Hey. Good morning, gentlemen.

Good morning, James.

First, Krishna, in terms of the divestiture program where we stand now, one sale or one announced sale, the second one probably coming soon. There were two businesses that you intend to divest by the end of this year. I believe and correct me if I’m wrong here but part of the gain item and gaining the assets up for sale was the completion of standalone financials for the businesses. Has that been done at this point? Are those being share (indiscernible)?

We have not checked that publicly, but the carve-out process is ongoing for some other businesses, principally the wellheads the drilling fluids. They have already been carve-out for businesses they are divesting. Is your question more about discontinued operations? Is that what you’re asking here?

Well, I was asking -- I think the two businesses, the one you just mentioned that you’re divesting that in order to line up the buyers -- they really just -- to see the financials from those operations, the carve-out process. I guess if you’re saying that that’s already occurred?

I mean, obviously, we are showing a carve-out financial set of statements to potential buyers for the businesses that we are socializing absolutely.

The other way to answer your question James is that remember there are four businesses altogether being sold, one is sold already, which is pipeline, now well testing. Then of course the other two you mentioned is wellhead and drilling fluids which are smaller. In all four cases, the carve-outs have been done ahead of time. The one that is I think still ongoing and will be ongoing for the balance of the year together with the process of audit and so forth will be the rig business. That’s a bigger animal and will be realistically -- will not be dealt with and whether it is a spin-off or an IPO variation thereof, it will not be dealt with until sometime early next year.

Okay. Fair enough. Understood. And then on the Latin American margins, I’m surprised at least my estimates to the upside significantly I think probably others as well. It sounds like from Dharmesh’s comments and Bernard your comments as well that those margins should continue. I guess I was concerned about the winding down with the Venezuela or winding down with the lower zone operations. But it seems like that that didn’t have a material impact on margins. Was there anything and am I missing something there in LatAm that drove better quarter than we should expect it or is this a good run rate going forward?

Well, I will give you some thoughts and Dharmesh may add to it. The biggest, biggest, biggest mover in Q1 was actually a drop revenues coming from the largest operation we have in Latin America versus Mexico. Revenue dropped by 30% in Q1 versus Q4. That 30% in simple terms, you could assume it carried very operating income. So revenue down, no operating income move, therefore margin dropped. Big factor. Second big factor is Argentina. Argentina has grown to where it is now the second operation in Latin America after Mexico and it’s hot on the trail of in terms of size of the Mexico. It overcame not only Venezuela should come down obviously for the reasons I mentioned, but also it has for us overcome Brazil and Columbia in terms of size and margin in Argentina very good. So that is the second factor. Thirdly, we have not -- we did not have the headwind of negative contracts in Brazil which some of our peers have. We are in different businesses. And so at the end of the day the only headwind we face in Latin America was the drop off in revenues in Mexico and the fact that Mexico is standstill all year. And then second, the self-imposed reduction of activity in Venezuela. But as I have just told you is that it’s overcome by all the things that I described and Dharmesh will add some further comments.

And James, the only other thing I would add to Bernard’s comments is we own extensive manufacturing footprint in Latin America and there is a lot of work on optimizing manufacturing footprint and that’s also contributing because you don’t have, I guess, the overhang of having inefficient manufacturing.

Which is actually cost driven for some margins.

All right. Got it. Okay. Thanks gentlemen.

Thank you, James.

Thank you, James.

Your next question will come from the line of Jim Wicklund with Credit Suisse.

Good morning, guys.

Good morning, Jim.

I don’t mean to harp on Latin America, were there any catch-up payments from Venezuela and Mexico or reversals from reserves in the quarter?

No. There was no -- I wish on there was any catch-up payments from Venezuela, I am afraid not. I think maybe Kris now you want to address the process ongoing with PDVSA. But the answer to your question is no and you will find the margins in Latin America will bump around where they are today throughout the year and they probably end up a little bit higher towards the end of the year, simply because the start-up to well construction contracts in Brazil and the fact that Colombia will occur in the second half of the year and that kind of stuff, so you won’t done, to start, speak to at least (indiscernible) when you comment on Venezuela.

And Krishna while you do outlook -- the catch up on Venezuela, can you tell us what the currency translation is being used and how that impacts everything?

So on Venezuela, we are still using on the currency side, Jim, the official rate of 6.3 like our peers because we don’t have any -- we don’t intend to access any of the other avenues of exchange rate regimes that are being put in place by the Venezuelan government. But on progress with PDVSA, we are in active dialogue with that customer to engage in a constructive payment program, which will allow us to work on a more concrete footing with the customer going forward. This hasn’t concluded yet, but the signs are quite encouraging.

Okay. And thank you, Krishna. And as my follow-up, I will ask both you gentlemen, what is the thing that you worry about most that could derail all these over the next 12 months everything you are doing? What’s the thing that you lose sleepover on a Tuesday night?

I would say Jim if we were not public, we would not worry as that. What I mean by that is that everything has to work very, very well, so we keep both the credibility and basically what we are doing and so that would be our biggest worry. If we were private which I am not, if there is anything we will be private of course. If we were private, I think what we are doing is so simple and the drive to explain to communicate what we are going has been so intense for the organization. Never mind Walls Streets of the organization that I think that people are aligned and this is organization that can perform and the people really want the company to do well. It’s purely a question of time, it’s not a question of weather. Dharmesh, do you want to add to it?

Sure. Couple of things, I would say, I would start with the U.S., it’s no longer about having sufficient contracts in our pipelines. We have the workers secure the work and most of it is core products that we do very well everything on date. So this is not exotic stuff. So we are not having to do any massive project integration or any of those things to deliver the revenue and the profitability they are targeting. The risk really is U.S. activity. It is really -- does it stay on this current pace in terms of as strong as Q2 levels selected today or does it stay down in Q4. The last two years that’s been an unknown event in terms of what happens in Q4. This year it doesn’t look likely, but you know the U.S. as well as I do. But if you take the U.S. activity out of the equation, you could have projects started delayed, but there is nothing that significant or the one project is that significant that would have a material movement when they have that done.

Perfect. Gentlemen, thank you very much.

And Jim, I would like to add of course the ever present geopolitical risk that exist, right. So this is the only thing out there which can cause everybody...

So to summarize the geopolitics U.S. and the generic needs for us to be reliable, you have now the triagle of worry.

Thank you, guys.

Your next question will come from the line of Ole Slorer with Morgan Stanley.

Thanks a lot. It’s very rare to see companies take up this kind of headcount and cost whereas having some kind of major impairments on the execution capabilities. So, could you talk a little bit about the 20 locations that you are already using, the need for all these, how much of your headcount reduction is to do with this location reductions and how do you feel confident that this isn’t impacting the ability of the court to execute?

Yes. On the headcount reduction, we have clearly identified by name over 6600 employees and the execution to-date has been very, very strong. Over 4300 employees have already been intimated and they are out of the company which leaves another 2300 to do. We have a week by week count of who is going to be intimated and which week and by the end of the second quarter, the rest of the employees will be off our payroll. So we have a very high degree of confidence in the execution of the headcount reduction, which will give us significant savings. Now, on the location closures, basically we’re targeting locations which do have any significant revenue attributes. They are locations, which have -- we've kind of been hanging on to them with the cost base in place, hoping for more work or trying to get more work, trying to bid ourselves into such markets and with certain product line. And what we’re doing now is to shut those down, consolidate our bases and focus on efforts in the right direction. So there will be some impact of writes-downs certainly on the severance and on the blue chip cost, no question about that. But our margins will improve substantially because we eliminate losses. Dharmesh?

Sure. So one more comment I would make is generally the cost cuts support positions. What we have done is that we basically come up with the template structure for we want the small country to look like, medium country to look like and a large country to look like. We analyze what support functions existed in these countries. Based upon the template, what is the headcount we needed and then we identified the appropriate measures that need to be taken to get to the right support structure level. In many ways, you are not touching, but I would call the revenue generating assets of your organization as part of the headcount organization unless like Krishna talked about earlier you happened to be exiting wireline in the country of Norway because you don’t believe it has a right future or in the short term, you may let go the wireline people in Norway. But a lot of the focus has been around exiting the support structure. And in many ways, that is one of the reasons why we don’t anticipate a very strong negative impact at all or any impact on the revenue and the ability to deliver the core products and services.

All right. I’ll give you the last overall view to add to what Krishna and Dharmesh said. So your point is well taken. What you’re really saying is that this business of laying off so many people leaves scars and always does some collateral damage. I don’t think anyone of us is saying that is not true. I would also say this, the notion that one can at the same time grow the core and so forth is have to come across is difficult because what we’re really saying is that we’re going to retreat and attack at the same time. So I would say they were clear on that. I think the first of the thing is the reason why we wanted the curtailment to happen with massive internal communication and I really mean massive Ole and fast. It's precisely to get the retreat bit out of the way, so we could move into next phase, this is number one. Number two, as Dharmesh has identified, most of the position, I mean, no disrespect to the positions concerned, but most of the positions being curtailed. That will be described as redundant layers that grew particularly in the very high aggressive growth years. If anything, they probably were an obstacle to good functioning of operations and so I think we have more than unleashed operations rather than the constraint operation. With respect to the locations, look we have rough numbers, over 1,100 locations. We’re talking about reducing 50. So you do the math, it is not, I’m using simplistic numbers here. We talked about 4% reduction, it is not a big number and you have by and large the candidates for shutdown have not been to my knowledge ever mandated from the Houston or Geneva, no. The logic of the…

Nice, very comprehensive and thanks gents for helping shed some light on what must be after all a pretty difficult process. So I’ll hand it back.

Your next question will come from the line of Bill Herbert with Simmons & Company. Bill Herbert - Simmons & Company: Thanks. Good morning.

Good morning, Bill. Bill Herbert - Simmons & Company: Do you guys have handy your core margins by sub-segment? And then also contemplating your 19% to 20% accelerate margin, what margin does that imply for each of the core sub-segments? And where are we today with regarding to sub-segments and where do we get to?

Krishna, I want you to give the margins if you can by core segments Q1.

So Bill, overall margins for all the core segments as we said was 15.1%. Bill Herbert - Simmons & Company: Got it.

Our production margin was 17.4% for Q1. Formation evaluation was quite low in Q1 because of some headwinds we had in the few countries, 5.5%. Well construction was 23.8%, completions was 23.6%, and stimulation will continue to be negative at minus 3.6%. That gives you (indiscernible) now. As we go forward, we expect overall core margins to grow nicely. We will maintain our own on well construction and completions, in fact grow them marginally. Production will be pretty solid. Stimulation margins will turn around, obviously with the market conditions and the continuous repair we’re doing on the businesses going into the second, third and fourth quarters. And formation evaluation will also improve as we go forward to reach the 19% kind of margin in the fourth quarter.

So, let me put it in perspective for you, Bill. I think, Krishna is reluctant to give you our internal forecast on future margins which I can understand although, it is all modeled. The biggest movers is obviously well constructions and completion of production on well, we’ll continue do well and there are some improvement for that plan. They are not very high, the improvements, the deltas are very high. The biggest delta comes in formation and evaluation. And then of course, because stimulation is still negative, it turns positive and there is also a delta. Bill Herbert - Simmons & Company: Okay.

Stimulation had the biggest impact on the weather, both Russia and U.S. Bill Herbert - Simmons & Company: So Q1 is difficult.

It’s important to know from a stimulation perspective color.

But at the same time, also that the -- you understand that we are not. And I think, Bill understands that we are not head of the pressure pumping companies. It is not revenue wise, the biggest mover. I know Bill understands that. Bill Herbert - Simmons & Company: Right. Got that. Thanks very much. And then more of a conceptual question going-forward here. In a world in which you’re generating very attractive margins on your best core businesses, you expect to witness any possible and well supported improvement in your underperforming core businesses. And that’s an overall margin which is going to be pretty to earn impressive. And then the world in which sort of global E&P CapEx is witnessing sort of methodical that’s hardly prosodic growth. Walk us through detention between trying to realize growth and preserving your normalized margins going forward.

That’s a fair question. So it is more of a macro or whether what the IOCs are doing is tenable from the supply of hydrocarbons standpoint. I’m referring to the liquid segment, not the gas segment which is a different story. So step out side, this is a topic for a different day. I think that we’re very, very aware that we cannot have too high of an expectation of growth internally here because of the underlying market. What -- we get some competent is a function of two things, three things really. And one is the fact that we have in our core’s leadership and segments of the business which are very specific, which are not ones that Wall Street is particularly focused in. They're not very large segments of the industry but still the one in which we excel. The reasons are, they will have to do with the situations of reservoirs around the world, are going to do quite well from a speculative standpoint. For example, there is business of well integrity. There is business in mature field place. In general, we'll see a more generous allocation of capital than we did in the past, obviously potential of the pie, this is one issue. The second is, again, remember who you are, who you are speaking with. We have, with the exception of North America, we have in rest of the world, how would you characterize our market penetration? It’s rather low. We have a very low share of the underlying pie. In fact by any measurement you take analytically, you'll find that roughly speaking, where we are in North America versus where we are internationally globally, there are differences. About one-third in rest of the world where we are as a participation of the E&P pie…

Your next question will come from the line of Byron Pope with Tudor, Pickering, Holt.

Good morning. Bernard, you mentioned that in the Middle East, North Africa and Asia Pacific, growth was led by the Gulf countries. Just was wondering if you could share a little bit about which geo market within that region, do you think drive the growth? I mean, there seems to be a lot of excitement about Saudi, so wondering if you could size for us, which of those geo markets were being most impactful to your growth over the next couple of years?

Byron, an easy question. But I'll try to make it a bit more comprehensive of an answer. The kingdom is obviously the place to quote Saudi Arabia. Why? Not only because the intense work on and around maintaining the oil production capacity from the development of -- continued development of their excellent reservoirs which are showing age, which is a one site of issue. The other side of issue is the development of unconventional Shell gas resources in the Northwest part of the country, which is a second sort of the development in Saudi Arabia. Combined both those plans executed large increases in drilling this year and next year. There is a biggest play by far in terms of delta. This is number one. I do not want to also forget and talking about Saudi Arabia, the other two large markets and now the third one which is Kuwait, Abu Dhabi and even Oman. All three of them for their only idiosyncratic reasons have some very serious expansion plans. The number in isolation because the size of their respective markets are not as large in isolation as Saudi collectively they are, so that the other move up. And I think to end up with the tale of two cities when you look at the Gulf coast which is on the one hand you have the market as was described where I think competitive intensity is high but growth is also promising, the quality of business is very high in terms of the types of technological requirements and operational requirements but at the same time, margins are good and it is quite stable, it's reliable. As reliable as anything could be in industry. Then you have the other markets which I think are more difficult simply because of the nature of the market and there will be Southern Iraq. And so it is understandable that's not for this company, of which Weatherford is one, choose to deemphasize Southern Iraq and then on the contrary emphasize the other one, which had really an attractive outlook. Always subject to geopolitical risk, attractive outlook and reliable buyer through the end of next year possibly the following -- possibly into 16, it shouldn’t take time.

Thank you.

I think the one last question and then we'll have to close because we’re a little bit above the hour.

Our final question will come from the line of Robin Shoemaker with Citi.

Thanks. Bernard, may be Dharmesh, I want to ask if you could give us an update on artificial lift and that as a product line in terms of growth and margins. We've been hearing a lot on recent conference calls about some solutions that other companies have come up with for a low productivity wells which clearly is one of your core areas. And so I wonder if you could comment on that and also if there is any changes in the business since the ownership one of your largest competitors in rod lift has changed hands?

All Right. I know that the common things you are hearing, everybody is talking about is, there are some more artificial lift we have bought which is ESPs and how ESPs are being used for the steel rods. I mean, simply, if you look at the efficiency of what's been publicized and what’s publicly available, the efficiency of that system are 20% at 50 barrels a day, the running value up to 40% something less, and around that system, we have 60% efficiency. If you look at the cost of changing an ESP, the fact that there were compass fundamental down hole, the fact that there was production changes from 1,000 barrels a day to 20 barrels a day over a span of a year. And then number of times you would have to change the pumps out and the cost, the electrical cost required, there are many, many factors that make it highly unlikely that you’ll have a large-scale replacement of RRPs with ESPs going. And I would say for only one customer that you talk about doing something like that, we also have several customers in our backlog of artificial lift the U.S. where they are moving away from the ESPs and moving to RRPs. So this battle of ESP, is it a new twist on ESP, is it a new twist on RRP, I think that battle will raise on as time will decide. But if you look at the fundamentals of what the ESPs are all about, look at the fundamentally economies that are running large scale works, if you look at the workover and the well servicing costs, it's hard to define what really the basics are, what is the right thing from a business perspective, from artificial lift perspective.

A closing comment, Robin, this is fun question, because this is our very first business that we developed 27 years ago in this company. What is wonderful about ESPs that they have a motor downhole because that gives them essentially tremendous, tremendous power to move fluids. What is terrible about ESP is they have a motor downhole because it’s vulnerable to break. Now I would just say that I think it is -- could be endearing to find now the humble field of artificial getting so much press after all these years. So in a way, it makes me happy. We take the competitive pressures certainly from GE very seriously because we should because it is a very, very good company and obviously a very large company et cetera so we take it very seriously. As we should assume that this is something that with make all of us more competitive. With respect to the replacement of this form of pump by that form pump, time will tell. I think a smaller diameter ESP in the horizontal section of a shale well is not a bad idea. Small diameter ESP in the horizontal section of a shale well has challenging economics and what I’ve just told you has been true, is true, will be true. Having said this, there will horses for courses. There will be applications where it does well. And I wish the company that developed it good fortune in getting the product up to market. And I’ll leave it at that. So with that -- with that -- thank you Robin. With that, I think we'll close the call, because we're a little bit over the hour. Thank you everyone for your time. Thank you.

Ladies and gentlemen, this does conclude today's conference. Thank you all for joining and you may now disconnect.