Bernard Duroc-Danner - Chairman, President and CEO Krishna Shivram - CFO Dharmesh Mehta - COO :

Jim Crandell - Cowen Securities Jim Wicklund - CSSB Ole Slorer - Morgan Stanley Angie Sedita - UBS

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 Second 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. With two prepared comments following up with Krishna and Dharmesh and then myself in the Q&A session. Krishna?

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 and non-GAAP financial measures. Please refer to our second quarter press release for the customary question on forward-looking statement and the reconciliation of non-GAAP to GAAP financial measures. My comments are going to address the second quarter of 2014 and then the outlook for the rest of the year. Earnings per share for the second quarter the whole charges was $0.24, this represents an 85% sequential improvement and a 60% improvement compared with the second quarter of last year. Revenue of $3.7 billion for the quarter increased 3% sequentially and 8% excluding the seasonal impact in Canada while operating income margins before R&D and corporate expenses improved 280 basis points sequentially to 14% and rose 350 basis points versus the second quarter of last year. Operating income margins before R&D and corporate expenses improved 280 basis points sequentially to 14% and rose 350 basis points versus the second quarter of last year. Eastern Hemisphere margins improved 576 basis points sequentially. North America margins increased 271 basis points to 15.2% reflecting very strong activity in the U.S. online more than offsetting the spring breakup effects in Canada. The U.S. margins improved 75% sequentially on 15% revenue increased. The Europe, Caspian, Sub-Sahara Africa and Russia region margins increased by 873 basis points to 16.8% reflecting the strong seasonal recovery in Russia activity increased market sale in West Africa and the record quarter for Europe. Middle East, North Africa, Asia region margins increased 273 basis points to 9.7% with improvements from the gulf countries. These improvements were only partly offset by a reduction in Latin America margins which were down 488 basis points to 12.4% reflecting lower margins in…

Thank you, Krishna, and good morning, everyone. Second quarter performance shows the initial progress of the core cash and cost program outlined earlier this year. Operational accomplishments initiated at the three areas for the quarter are as follows. Cost; reduction in force is 90% complete, and will be substantially complete by the end of third quarter. Once concluded we will achieve our objective of a ratio of three revenue generating employees for each support employee in the organization. We remain on track to deliver a step change in revenue and profits generated on a per employee basis by the end of the year. We have completed identification of all the exit locations where we are not competitive, and we will continue to work diligently to complete the exits in the next 90 days. From this point forward, operations will focus on areas where we provide differentiated products and services to our clients. The net result would be continued improvement in margins in the quarters ahead. Some relevant comments on the five core segments; artificial lift, the second quarter saw continued operational improvement in artificial lift product line. Demand increased across all the different forms of lift has witnessed by incoming orders in manufacturing. Highlights for the second quarter are: a continued increase in demand for the high volume Rotaflex pumping unit. Demand increases due to activity in unconventional world and also the previously discussed ESP replacement program. Manufacturing capacity will increase by 100% during the third quarter to meet the increasing demand. A 25% increase in our rod (ph) bearing capacity during the second quarter to meet the increasing demand caused by the shift to horizontal wells. Over the past year, volume has increased by a 450%. The patented automated rod rotator has followed the same path of growth. Integrated…

Thank you, Dharmesh. So the quarter was progressed, the quarter was solid. We have the highest -- company’s highest exhibition of operating income in recent history. That’s exceptional in of itself, particularly a second quarter which is traditionally weak at Weatherford. The quarter was all about operations. Operating income increased by $0.11 Q1 to Q2. Corporate interests were near identical for one quarter to the next. R&D and other which are essentially non-cash foreign exchange fluctuations or $1.5 higher. Taxes were $1.5 lower or just about perfect offset, Q2 was earned at the operating level. In our operating performance, North America was up $0.05; Eastern hemisphere was up $0.09 and only Latin America to push that back down $0.03. We expected little more to the Latin America, little less in Canada. In the aggregate, they both netted themselves. The quarter otherwise went as timed. Canada matters a lot to us, it represents on average about 20% of North America. In Q2, Canada went through its seasonal break up it wasn’t as sharp as in the prior year. The weather pattern was normal for a change and also and this makes the bright side of the Canadian moon Q1 hadn’t been as strong as in prior years. As a result, Q1 and Q2 comparison were not punitive. Revenues declined sequentially by 35% in Canada and earnings declined by about $0.05. The region held detrimental of 34% which is good performance. The U.S. had a very strong quarter, one of which we believe will become a pattern of continuous improvements over the next 18 months. On 15% increase in revenues and where there were 50 percentage point incremental. The U.S. delivered closer to $0.10 increase over Q1. The improvement was across the board with formation and valuation creating greatest incremental margins with…

(Operator Instructions) Your first question will comes from the line of Jim Crandell of Cowen Securities. Your line is open.

My question revolves around just getting a bit more granular on the revenue growth in the margin improvement over the second half of the year. Do you think it's reasonable to be looking in at Q3 and Q4? First of all, Q3 is high single-digit overall revenue growth quarter to quarter and then in Q4, outside of North America, which might flatten out seeing that similar growth in Q4 on the revenue side?

I think so, yes.

Okay, so and then could you look at your margins. You had talked about in the release I think of margins approaching 20%. Is that after R&D and corporate expenses and could you -- that's before…

Yes, it’s before. We expressed the regional operating income before R&D and corporate. R&D and corporate, you see it anyways, you can adjust it. And it is 14% before R&D and corporate. It’s just under 11% after. This is in Q2. So to presume that R&D and corporate stays the same, you can adjusted easily, so 20%, it would give you.

Okay, and could you give some rough commentary on your margin expectations by region by as an exit rate for 2014?

Actually they are -- in simple terms, the modeling to be done offline, but they are remarkably similar. I think Eastern Hemisphere, Latin America and North America, the exit rate actually will tend to -- with a few differences, will tend to coalesce at about the same level. I will leave you with that. So given the fact that there are some differences today, you can understand we’re finally on to move more -- the most between now and Q4. But in Q4, they are coalescing at the same level. I will also point out that in happier times, the last peak, biggest from the four off -- the margin of the Eastern Hemisphere, Latin America and North America were about the same. They all peak around 24% to 25%; again, on the same basis, pre-corporate and R&D.

Okay, and just one last follow-up Bernard, is there any risk of not closing the Rosneft deal? Or any concern over sanctions and how that might affect your business with them?

I think there is, until things are closer, it’s always concern on any deal. There is no specific concern on Rosneft at all on closing the deal, it is rather again straightforward. This is procedural. This is the first segment and I think it should happen this quarter. This is the first thing. Sanctions, I think are relevant to all of us. We abide by sanctions very carefully, both the content and the spirit of the sanctions. They do not affect the transaction. It is a cash transaction, so basically it is held harmless, when it comes to sanction. Future sanctions, but I cannot speculate on that. I think it would affect the whole of the industry. So in summary we expect to close Rosneft and pipeline as in normal course of action.

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

It was clearly an impressive quarter, and the guidance for the rest of the year is probably even more impressive. The one thing that struck me, Bernard, is you're talking about the eastern hemisphere has a long runway of improvement ahead, and most of the large-cap companies are operating at record revenues and record income already. I'm tying that is to something, Krishna, you said a while back that when you came to Weatherford there was more technology here than you had expected. And Dharmesh Mehta went to a nice little litany, going through the world and the market segments, and I swear you guys talk more about cool technology that I've heard you talk about before. Is a lot of the improvement over the next year or two, especially in the eastern hemisphere, going to be the result of aggressive bidding or improved technology at good margins?

Look, I think first of all, the longer the timeframe you take the more technology that comes relevant, right? This is the first thing. Second, just looking in absolute numbers; so you know at the operating income level, Eastern Hemisphere is around 13% or something like that in Q2, right? When you peel back, in 2008, our operations were not as good as they’re today. The stopper technology was not as deep as it is today. Our infrastructure is better today than it was then. I would argue our management is better today than it. Right, 24% in economic sale 13-24 is 11 differential I’m not suggesting we’ll go from 13 to 24 over right I’m suggesting there is a lot doubts how to get done in Easter Hemisphere. This is the first of a simple financial perspective. With respect to the expectation of technology and will reason to do over a period of time I’ll send it to Dharmesh’s comment.

I think Jim I would say that the technology portfolio definitely has a very strong role to play when I said growth in the corners ahead. What is really driving the growth is the combination of applying the right technology in the right geo markets in a very structural and methodical way. Simply put out the execution efficiency on the broad front that will drive the growth in Eastern Hemisphere. There are some significant markets, like Angola we’re just now getting back into. So that will also have a role to play. So unless I presented in some markets that will a factor and historical execution on a broad front will be other factors and we’ll drive a long-term growth.

And I’ll close the philosophical comment. If you think Jim, I don’t want to belabor this I’m told I should not belabor it because people are tired of hearing it. But if you go through the process four or five years of self-destruction the whole business commercializing technology goes away. The happy news about that is that in that period time of self-destruction we never the technology train, ever. So we continue to develop acquire, develop and spend money on technology without commercializing and we also didn’t go after a number of different markets precisely because we’re highly distracted. When I use the word unencumbered focus what I’m referring to specifically what Dharmesh was describing is the freedom, the ability, the focus on essentially harvesting what we have not acquiring it’s about a harvesting what we have, we have too much the reason why Krishna said when he said when he joined specifically because he was amazed by what we have and we are not actually commercializing. Which in part you can say is awful but it’s part of the functioning of the -- that period of time which I refer to too often as self -destruction.

And I’ll close the philosophical comment. If you think Jim, I don’t want to belabor this I’m told I should not belabor it because people are tired of hearing it. But if you go through the process four or five years of self-destruction the whole business commercializing technology goes away. The happy news about that is that in that period time of self-destruction we never the technology train, ever. So we continue to develop acquire, develop and spend money on technology without commercializing and we also didn’t go after a number of different markets precisely because we’re highly distracted. When I use the word unencumbered focus what I’m referring to specifically what Dharmesh was describing is the freedom, the ability, the focus on essentially harvesting what we have not acquiring it’s about a harvesting what we have, we have too much the reason why Krishna said when he said when he joined specifically because he was amazed by what we have and we are not actually commercializing. Which in part you can say is awful but it’s part of the functioning of the -- that period of time which I refer to too often as self -destruction.

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

Yes, congratulations, you gave it a good quarter. And no point in belaboring the guidance for the second half, it's very clear, it's very crisp. But the -- I suppose the only Achilles' heel left in your product offering is pressure pumping, although the improvement sequentially was impressive. Specifically, do you see a scenario where this division catches up with your overall margins? Morgan Stanley: Yes, congratulations, you gave it a good quarter. And no point in belaboring the guidance for the second half, it's very clear, it's very crisp. But the -- I suppose the only Achilles' heel left in your product offering is pressure pumping, although the improvement sequentially was impressive. Specifically, do you see a scenario where this division catches up with your overall margins?

I think first - pleasure pumping is not our specialty I mean as every knows on the call. Our specialty is lift; specialty in well construction, all specialty is also completion and formation evaluation. It doesn’t mean pressure pumping doesn’t belong, it just means that this is not what we’re known for.

I think first - pleasure pumping is not our specialty I mean as every knows on the call. Our specialty is lift; specialty in well construction, all specialty is also completion and formation evaluation. It doesn’t mean pressure pumping doesn’t belong, it just means that this is not what we’re known for.

I would have to say that the emphasis on the domestic pressure company is not much to grow it’s become far more efficient and high quality. So to the degree that we are successful there without perhaps the handicap of startup costs and so forth and so on as our peers may have. Actually the domestic side should do increasingly well when we focus on execution quality and efficiency we keep the clients happy. That’s item 2. Item 2, you don’t have any distractions; you tend to do pretty well. And as the margin on the domestic pressure pumping are lot below although it much improve as Dharmesh highlighted. We should actually pick up some nice numbers there internationally we intend to grow that, and internationally is doing well. But the short answer is that we see no reason why the international margin should not be held in good standing versus the rest all the midpoint to the margins for our internationally, domestically that clearly not, we think we give the number we are not positive operating income I know you can say it’s not bad improvement that’s going to go up because of our focus, they’re not going to be aggressive a total on the expansion but we are committed to the quality in the operating execution. We should expect the domestic size to rise a little within market and probably right year for us than others who have destruction, indeed the level represent a large part of what we do that point. But it will not be also a handicap.

Backing into the margin guidance of 20% that you're giving and adding back R&D and G&A and the all the rest of it, it looks like it translates to about a 15% overall EBIT margin. Morgan Stanley: Backing into the margin guidance of 20% that you're giving and adding back R&D and G&A and the all the rest of it, it looks like it translates to about a 15% overall EBIT margin.

15% is a better number, but let’s not quibble on it because you should lock up about 3% to 4% in between so let’s not quibble on it, 15-16, yes.

When we look out to 2015, the improvements this year have been easy to identify, extremely -- I'm not saying they've been easy to execute, but they've certainly been easy to identify, next year maybe less so. Let's say in a flat to pricing environment internationally and with the kind of disciplined growth that you're now targeting, where geographically and by product line do you see margins lagging and leading in 2015? Morgan Stanley: When we look out to 2015, the improvements this year have been easy to identify, extremely -- I'm not saying they've been easy to execute, but they've certainly been easy to identify, next year maybe less so. Let's say in a flat to pricing environment internationally and with the kind of disciplined growth that you're now targeting, where geographically and by product line do you see margins lagging and leading in 2015?

That’s a difficult question speaking in our conference call, but I would say that if you remember the few comments I gave on Eastern Hemisphere, were 13%. We were not only, not just one day, we were not as good of a company than we are today. I really do want to underline that point. We were 24% in Latin America also at that point in time incidentally. So the progress that we can make both in Eastern Hemisphere and Latin American, which Latin America was around 12% or so, that was tough quarter for them in Q2. So but they both have a lot of move up, not because of pricing particularly, simply because we are -- it’s hard to believe, you could do so much with self help, but you really can and the first phase of what we have it is all about self help. So Dharmesh mentioned Angola for example, not to pick on one country. Today you have country where we essentially did not exist for a variety of reasons. That’s a natural market for us in terms of the well construction offering offshore and deep-water. This is a fast example. So I could say the same thing about Malaysia, I could say the same thing about Indonesia. I could say the same thing about lot of markets around the world and the at the same time we’re pulling out of places where honestly although one could have a sort of vision of doing better over the very long term et cetera, et cetera, it was too much work with too little return. When I talk about the notion of returns, I am not taking only about return on capital employed; I’m talking about return on time, return on risk, all these sorts of things. We’re very religious about this and as we pick our fight in different markets, you will get actually results that are differentiated from market movements. That’s the self-help bit, and Krishna wants to add to this.

You can envisage a future without the non-core business as once we get them divested. If you look at the margins that we are already making on our core businesses and the trajectory of improvements in the core business margins which we said we would approach to about 20% and that’s what we are left with around the world it’s not a big stretch to imagine that the entire company would be at that margin going forward into 2015. So this is going to be an overall improvement, but certainly where the non-core businesses are heavily represented and they get divested being a low margin, the resulting core businesses you will see the margin drives quite dramatically.

Would it be possible to see the fourth quarter exit margins represent the overall annual margins for '15, or would that be too bold, given the seasonality? Morgan Stanley: Would it be possible to see the fourth quarter exit margins represent the overall annual margins for '15, or would that be too bold, given the seasonality?

Ola, that would not be good conclusion because we would still in the fourth quarter, we would still be carrying some non-core businesses.

No, I am talking about excluding non-core. Morgan Stanley: No, I am talking about excluding non-core.

No I think there is some more growth attributes going on into ’15. Our prognosis is that as we get additional growth in international markets, where we are underrepresented, given our efficient cost base, we should see margin expansion right across this atmosphere going into ’15.

This is not the same common growth that we used to talk about many years ago. This is very selective growth.

Thank you, Bernard. Okay. Morgan Stanley: Thank you, Bernard. Okay.

We both agree.

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

Could you talk about your business lines and what you're seeing in pricing across your business lines, and along with that specifically, artificial lift? I'm sure you've seen that Schlumberger has acquired roughly 12 rod-lift companies, and both Baker and Schlumberger are developing new lift technologies for the US shale market. Clearly a core market for Weatherford. Could you talk about your long-term strategies for artificial lift? How you're going to protect market share and where you are seeing pricing across your product lines?

First, we are not seeing much pricing uplift and official lift. I mean -- and that has nothing to do with movements of new players in and out of the marketplace. So there are some movements, pricing that are selective, particularly around rod-lift positive, but it’s not a big factor. It hasn’t been let’s say a big factor in some quarters. This is the first thing. Second of this is a question that deserves a much longer answer, but I would just say this. We are at this point represented from an automation standpoint in just about 1 well out of 2 worldwide in the lift world. That means we command a position of being able to be the brains of lift on 1 well out of 2 in the world, which means that frankly whether we are talking of this form of lift or that form of lift where enormous amount of intelligence it is a position which is normally held by our larger competitor in other fields. It is one that we’ve build over the years and one that we intend to harvest. It is we are moving really fast and very fast ahead and this business being more of a provider of production efficiency is a sub provider of mechanical tools. And we’re uniquely ahead to be able to get that done. We do not underestimate the capability and strength of not only Schlumberger but also GE [indiscernible] which are formidable competitors, no doubt about that. With respect to developing forms of lift that will this business will stay flat. I think everything that is being developed is interesting and useful and they all have that place. Lift was the first business have developed almost a 100 years ago at what was then EDI and now Weatherford. I can tell you that the day when rod-lift will eliminate ESP is not about to come. Today when ESP will eliminate around this is not about to come. Both of them together with gas lift and hydraulic lift and so forth have that place and the evolution of the technology will continuously mean that some of them are better dedicated in certain reservoirs and that fact. So they will tend to take share here and as of share somewhere else which is what I have seen forever. I think it has to be pretty much in all forms of lift and above all that is automation and our specially intelligence to be able to really understand what could make the difference to your plans in order to really have an impact and also then in particularly category which is that will do this, will do that. And I would like Dharmesh may want to add to.

The one additional complexity in lift now is really addressing the challenges that have been post by the unconventional reservoirs. The production decline rate significant enough in the first 12 to 24 months that without a proper automation and sophistication authorization solution I mean particular lift forms and not last a very long time. So that, some additional challenges reside just what was historically the challenge in our official lift. Position and optimization which is in a good shape there.

Long answer [indiscernible].

That's very helpful, I appreciate the long answer. And then as an unrelated follow-up, can you talk about the land rigs that are left in your portfolio and what the options are? It would seem that it's too small to spin off as a separate entity, point number one. And then number two, given what's happening in Iraq, is it fair to say that nothing can occur until that situation improves?

No, not really I think that’s all the fleet of 115 or so which is part of that gives the largest international land rig fleet I think. So, really slightly it’s large enough in revenues and so far and so long it’s large enough to be on its own without -- I think that’s type of statement although stop the capital markets is inside that, but I suspect its large enough by as far. And then most of the rigs are very large rigs and also very young rigs I mean the fleet is less than being seven and eight years old on an average this is remarkably young, this is the first thing, very high quality fleet. I think with respect to Iraq, we have seven land rigs in Iraq which if things don’t stabilize we will export out of Iraq and definitely the exporting and the reassignment to different markets will be a positive. So, you are right to highlight that but it doesn’t really have any it doesn’t stop or in many way I will form the divestment of the land rig operation without being really one in that situation by the way but so, yeah we have to do that depending on what happens in Iraq definitely but just piece of deposit. I would also say the land rig market internationally general is becoming stronger and I think there is a developing shortage of equipment which always an exit for interesting situation.

Alright, fair enough. So the profitability of those rigs is high enough to justify the standalone today?

It will be Angie, it will be by the time -- the time of divestment is conditioned by two things. One is having a full year of audited statements and so forth and so long so that we are well accounted that we can properly have this particular business can be presented to the investing companies this is item one. At the same time working diligently in order to improve the efficiency and profitability equivalence is in fine shape, so that makes it clear.

I think given the time we will take one last question if there is one and we will close the call. So, it’s one last question please.

Your next question comes from the line of Jim Crandell of Cowen Securities, your line is open.

Thank you. Bernard, over the past year, you've signed a couple of very interesting agreements with [sign a pact] and Rosneft. And they're, of course, different. But to what extent do you think that alliances with major NOCs could be a key driver of your international business going forward?

Well, I think in general NOCs are more likely to expand the level of expenditures over the next three to five years, it doesn’t mean the IOCs are not important, they will always be important as many independents are important. Particularly in North America they are all important. But the eastern hemisphere and Latin America the NOCs are the most important therefore being particularly useful and recognized as such by any NOC is a positive for Oil Company particularly people like us. Doesn’t have to be seasonal type of having to be Rosneft. But any NOC, particularly the ones that have large budgets, I see [Indiscernible] as a last budge, Rosneft as a large budget I could come up with half a dozen others where we seem to have a privileged relationship not monopoly but privileged relationship I think it’s a very useful position, out a strategic position to have, very important.

Alright, and just a quick follow up Bernard, when do you see the sort of dealt of the meaningful move upward in Mexican business

I think the second half of the year will be doesn’t affect complete because that’s so difficult. And for no other reason than our client is holding back on expenditures while the essential chapters of the reform are being legislative which is on understandable. So, expect the second half to be materially better than the first from a client perspective that’s all for us expect ’15 to be far better than ’14 and then ’16 to be far better than ’15. I’m not being Pollyannaish I’m just being actually this is an inform to you.

So, it's not a -- you hit a spot and then you see a dramatic acceleration, it's more steady growth (multiple speakers)?

Steady, but I’m…

[Indiscernible]

Yeah, yeah it is that but it is also the from a Pemex perspective I think the rate of increase ’14 on ’15 and ’15 on ’16 will be very healthy, I mean it’s purely a question of knowing what one can work on and be able to then deploy the budget which will be considerable. So, it is a very very interesting situation, it is one that, which is a long term play but a very stronger to play and I won’t even go into the issue of international capital coming to Mexico which is separate issue, very important.

Quick last question, Bernard. You were hurt in sub-Sahara Africa for a period of time because of FCPA, and it seems you are now regaining market share in addition to the growth in the market. Do you still have a ways to go in the regaining market share (multiple speakers) part of it so that you will see strong -- stronger than -- well above, let's say, industry growth in that market?

I think that’s a fair statement. Also think we are not regaining marketed share we will now rely to have market share. So, I mean such a worth in that or pushing that away we have more to gain and people realize an international market for us. After the international market given our well construction thing, where do we have well construction that applications that matter offshore deep water. Once off strain well construction, are we present to that? No. why not? Variety of reasons which means the one that you mentioned that’s it in the start.

See you talking mainly about PRF and managed pressure drilling?

All of the above.

Okay, good. Okay, that’s it for me, thanks Bernard.

Thank you very much Jim. Thank you to everyone, I will close the call now. Thank you.

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