Good morning. My name is Carol and I will be your conference operator today. At this time, I would like to welcome everyone to the Weatherford International fourth quarter 2017 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks there will be a question-and-answer session. [Operator instructions] We ask that you limit yourself to one question and one follow-up then re-enter the queue for any additional questions that you may have. As a reminder, ladies and gentlemen, today's call is being recorded. I would now like to turn the conference over to Ms. Karen David-Green, Vice President of Investor Relations, Marketing and Communications. Ms. David-Green, you may begin your conference.

Thank you, Carol. Good morning and welcome to the Weatherford International fourth quarter conference call. With me on today's call we have Mark McCollum, President and Chief Executive Officer; and Christoph Bausch, Executive Vice President and Chief Financial Officer. Today's call is being recorded and a replay will be available on Weatherford's website for 10 days. Before we begin with our prepared statements, I'd like to remind our audience that some of today's comments may include forward-looking statements. These matters may involve risks and uncertainties that could cause our actual results to differ materially from our forward-looking statements. Please refer to our latest Form 10-Q, 8-K and other SEC filings for risk factors and cautions regarding forward-looking statements. A reconciliation of GAAP to non-GAAP financial measures is included in our fourth quarter press release which can be found on our website. Christoph will now provide an overview of our fourth quarter and full year 2017 results followed by Mark's comments on our strategic actions and continuing progress toward our operational cultural and financial objective. Following these prepared statements, we welcome your questions. And now, I'd like to turn the call over to Christoph.

Thank you, Karen. As mentioned during our last call, we have embarked on the transformation we plan to drive increased accountability, efficiency and process discipline across the entire company. During the fourth quarter, we completed an organizational realignment that will enable us to achieve these objectives. As a result, this organizational realignment is now structured by Hemisphere. With Western Hemisphere including the former North and Latin America reporting segments as well as land drilling rigs in Mexico, in Columbia. Eastern Hemispheres includes Europe, Russia and Sub-Sahara Africa reporting segments. The Middle East and Asia reporting segments and land drilling rigs in the Eastern Hemisphere. [indiscernible] hemispheres are now operating and customer facing organization, is structured into 14 geozones. This structure allows us to decision-making, and resources closer to the point of delivery while giving us the ability to significantly increase integration and cross product line synergies. As presently change in our reporting structure, we had also changed the classification of R&D expenses which is now included in the segment operating results, aligning us with our peers. As you may have noticed in our press release, we are now disclosing the revenue for each of our global business units, drilling and evaluation, construction, completions and production. Corporate expenses remain reported separately. The following comments reflects this revised organization and all historical financials has been restated to allow for comparison. For further details on our revised reporting structure, please refer to our [indiscernible] SEC filling and the accompanying presentation. Revenue in the fourth quarter of 2017 was $1.49 billion, up 2% from the third quarter of 2017 and up 6% year-over-year. Excluding the divested U.S. pressure pumping business, revenue increased 2% sequentially and 11% compared to the same period last year. The sequential increase is primarily led by the Eastern Hemisphere, with…

Thanks, Christoph, and good morning. Our fourth quarter results reflect the period of adjustment, as we effectively hit the reset button, on our organization. With those several strategic actions to improve our operational structure and our balance sheet. Most critically, we completed an organizational realignment that is reflected in our new reporting structure. This flat structure clarifies the possibility, prioritizes process discipline and solidifies the strong connection between our operational leadership and field level decision makers. Our breaking down silos and creating alignment to a common set of goals and objectives, we build the [indiscernible] of our organization. This comprehensive change in structure was my top priority for the fourth quarter and Mark refers milestone in our turnaround. Our realigned organizational structure gives us point slightly work problem as we move toward our target of $1 billion and improved results over the course of the next 18 to 24 months. As I first described last quarter, the $1 billion figure is the aggregation of number of opportunities across every aspect of our business, from an improved market share, the lower supply chain costs. During the fourth quarter, a third-party independently validated, that the size of the price, is largest what we saw. And working together, we are now we have defined those number of sink buckets of operational and functional opportunity to capture this value. These budgets of opportunity now formed the basis for work streams of future activity. We’ve set targets for each work stream and have established teams of people who will own and hold accountability for realizing the targeted value. We are currently engaged in a bottom up planning process that will yield the detail, comprehensive and clearly defined set of action plans to deliver the work streams target. And finally, we put a project management organization…

Thank you. [Operator Instructions] Our first question this morning comes from Bill Herbert from Simmons & Company. Please go ahead.

Mark, if you could shed some light there with regards to, what you’re contemplating in terms of managing the balance sheet from debt maturity standpoint, I know you’re having some discussions with regard to your revolver and if you could give us thoughts on that that will be great. Thank you.

Hey, good morning, Bill. On the balance sheet in general, I’d say the debt side, I think as you saw last quarter, we’ve noticed that the bond market is very off right now and we’re monitoring that very, very closely and as we are monitoring it, we see there is an opportunity for us if there is, we’ll then take some actions. On the revolver and term loan that will take a look at more time, it expires mid next year and we will start some discussions, I’d say mid-year on the revolver and the term loan. Does that answer question, Bill?

Yeah. It does. I mean, I guess the question is Mark, and Christoph, do we think it’s likely that, your refinancing is going to be forthcoming and extending your debt maturities?

We understand, in the quarters we’re doing and I think you’re going to see us to be opportunistic, okay?

Okay. Great. Great, thank you. And then the last question for me is, in relation to your divestitures, I understood that if I heard you correctly $500 million in expected proceeds, excluding the land rig sale, is that correct?

That’s exactly right. Those were the -- the other small divestitures. So there is a basket, there’s not just one, several of those that we talk about last quarter that and we intend to do over the course of 2018, some will give you the initiators and others within the process of [indiscernible] and preparing financial statements and all things that are perquisites of getting that process started and we’ll kick off too here in the next month and so start those, and that will take a little time, but in the meantime obviously the land rig drilling divestiture process we’ll continue to work on that. Part of what you saw in terms of all the accounting stuff that happens in fourth quarter was building the drilling rigs to assets held for sale from an accounting standpoint and we don’t do that unless its imminent and so that’s kind of where we’re at. So, we’re closing in on that and feel confident we’ll get that -- get something that done here in the next month or so.

Our next question comes from James Wicklund from Credit Suisse Securities. Please go ahead.

One thing that always has got me about this business is the disconnect between time, in our business we can make a decision and takeout a position in microseconds and you guys have the live with the decisions for years. Mark, when you talk about, you’ve got the organization realigned in Q4 and that happened frankly little bit faster than somebody might have expected from business and the fix through this year how is the improvement in results your 2018 to 2020 performance for the $1 billion can you kind of tell us is that going to be back end weighted, should be evenly done. I’m just thinking from the perspective of gosh you said last week you are going to do it and its a week later ahead was probable and nothing ever happens in corporate America as fast we wanted to happen on Wall Street. Can you just talk about the timeframe and how patient we needed to be or should be in seeing the improvement?

I appreciate the question, you are right. It’s a lot here to stick an excel spreadsheet model than it is to execute to work and you are right. We think the organizational changes and shifted the management team around that all happened in the month of October and so we have been drilling it now for about three months and the four quarters now reflecting back on of course following that change a lot of other shifting around as people reexamine where they are and balance sheet, a lot of decisions that happen. And so that’s why we look at before as massive reset in terms of where things stand. But also, during that timeframe, we have been working on first of all try to make sure that ours wasn’t just a lending business, this really was $1 billion of opportunity and clearly as others have come and seen it both from the outside and third-party guys look at it as our team began to dive in and they are looking at, everybody is looking that wow, this opportunity is huge. And so, the easy stuff has been done in order to do the next steps and they are going to accomplish in this $1 billion when I talk about transformation it really is changing the way that Weatherford works. It is effectively going through the integration process for all these acquisitions that they have done over 30-year time span that’s not been done its deferred maintenance. It didn’t take a quarter to get in the situation it is going to take longer than a quarter to get out. And so, the opportunities there everybody sees it and so what we are doing right now over the next month or so is defining here in detail work task I mean…

Okay, that’s all very helpful and I appreciate that. And now let me, with my follow-up let me ask a little, a ruder question and an elephant in the room question considering what you put up this quarter. The consensus has you had a $183 million in EBITDA in Q1. Do you think after today’s call that number stays the same, goes up or goes down?

The $183 million will get down, I think there is no doubt about that. I tried to walk in my prepared remarks, it's going to be going to think we are at the end of Q1. We definitely had a couple of exceptional items in Q4, which we will not repeat in Q1. We have certain seasonal items, usual Canada story, a little bit slower, you will not have repeated product sales at year end. We will start to get some savings in there in Q1 from what Mark just talk about, so overall, it's going to be a significant improvement from Q4 but it's not going to be the numbers you just mentioned.

But that will also to be qualify that, as you go through the year, that is where I uncomfortable with the look for the year, I just think that Q1 fine and I think that people are underestimating for the transformational back into the year.

Our next question comes from Angie Sedita from UBS. Please go ahead.

Thanks, good morning guys. So, Mark on the $1 billion and improved profitability, obviously you have done some work you have brought in some people here to look at this well and confirm your own thoughts. Can you walk us through what the buckets are, you mentioned market share, supply chain and then how much potentially maybe even a range and what could be in each of those buckets?

I was a little hesitant because of to all the buckets at this point, because we still I had all these detailed plans and validated with specifics action sets, I don’t want to get to restricted. But I would tell you that bonds we are the targets that we are driving forward internally. We feel, look at each of these work frame buckets, they add the numbers that are greater than a billion. So, what we are going after. The second thing that I want to tell you, is that when we talk about the ability to get it done, it is a net number not a gross number and so the project is being oriented to become self-funding so that after some seed money it will start paying for itself. and so, as we execute along the way. And then I think the third thing that -- think about this, and I said on the call, this is not just costs, the transformation has a significant sales and improved market share, improved pricing, there are a lot of different things that we are looking at on our go to market strategy. We talked about the account management structure of changes there, we had for the first time organizational very detailed plans, by the customer and that’s charging the sales organization to be creative and working with customers and more rather than just sort of sitting back and waiting for things to be out there, helping our customers, value-added projects, but at the same time, making sure that we are getting as we as much as our fair share of the market through this transformation. So, there is a bit of sales component of this that will achieve these partners as well.

Okay. And then maybe kind of follow-up to that is could you divide it into how much is cost versus how much could be your sales component? The two-thirds cost and maybe a quarter of that is market share and account management?

And so, it’s probably on a broad rule thumb, yes, the one-third is sales, two-third is costs.

Okay.

Maybe higher sales.

Okay. And then as an unreleased follow-up, if you think about your leverage for free cash flow in 2018, you obviously monetized some inventories in Q4, maybe you could talk about talk about further inventors to be monetized in 2018, is there something still up to be done, I would assume, yes, and other levels for free cash flow in the year?

I'll take that. Yes. So, we had a very, very [indiscernible] of our inventory as you saw from balance sheet size and yes, we had significantly additional amount of inventory, we believe we can monetize in 2018. Those are high lending products which is currently very high demand and we had several projects on our way to reduce the inventory and enhance the inventory days to bring them down. So, I think in many cases maybe with the exception of inventory relates to deep water activity, people see more opportunities to improve our working capital and inventory in specifically 2018.

Our next question comes from David Anderson from Barclays. Please go ahead.

Hey, good morning, I was wondering if you could just give us the sense as to how much the pressure pumping business this quarter kind of leaned on your margins. I guess in other words, I am expecting to see a step up I would expect in the first quarter, can you just give us sense as how much is that kind of how back in the quarter?

Sorry, David, your question was what the pressure pumping business, we had how much -- the margins -- is that your question?

Yeah. You understand it. What there a margin drags during the quarter on the pressure pumping that gets uplifted in the first quarter?

Yes, relating to Argentina specifically, where we had a delay as I mentioned in the startup of an integrated project, which includes especially integrated completion project with under operating pressure pumping as well as flow testing and the drag overall in dollar terms compared to Q1 because Q1 will go I will say probably slightly north of $10 million.

Okay. Alright. Thank you for that. It’s a different question on the artificial, you talked about gas becoming a bigger deal displacing some of the ESPs out there. Could you guys talk about how bigger part your overall artificial lift business that is?

Out of that percentage, the cancel it I have a rough number taking use either overall tickets amounted significantly lower as you know because the gas lit installation is fully $10,000 or litners pumping units is maybe 10 times as much. So, the number per installation is significantly lower. A number from my perspective on gas list is a percentage of the overall artificial lift business is probably around 7% to 8% in that range.

Interesting. And then just a follow-up on the artificial. Mark, last quarter you talked about some of your in particular through that business was being relative you talked about some issues in supply chain the cost you are talking. I am just thinking about as you talked about supply chain and you talked about your account managers and all that. Is that business a particular target of a lot of those efforts. I am just trying to understand how that business has been doing? We kind of get the sense of that has been doing well I’m just wondering how much your efforts are accompanied into that business?

I am not targeting the list business in any way changes that we’re talking about account management and the other things have been done on a very holistic basis. What I would say is that historically the artificial list segment of business has been a very, very high percentage of Weatherford's overall North America business particularly in U.S. I mean it’s quite high and as a result, when you look at the number of sales people you have associated that’s where the bulk of those work the sales was divided between all the performance link headed on unit sales had an overwhelming number of those guys versus some of the other product lines. And so, what we’re trying to do adding accounts, more customers in the account management culture and change in the sales works is try to make sure that all the product lines are getting equal representation. The stock model pull lifting us or hanging is really just say when we have the customer relationship out there regardless of which product line or sales person representing to have that relationship we all be able to use that relationship to bring and introduce all of our products and services to those customers and offer solutions that make sense to them. And so that’s what we trying to do and some of the other things we talk about list, because of the size and there was lot of inventory so far what we were doing in this quarter was trying to bring down some of our inventories in that particular area not manufacturing more, trying to get really focused on looking at our safety spots and getting those down to where they need to be. And I think also we saw as we moved things around of our product portfolio, that probably gas lift was being somewhat the deemphasized and so and what you can see is in our results at fourth quarter, as we increased the emphasis on gas lift and jet lift as an alternative to ESPs, because we do believe that, ESPs don’t solve all the problems and there are cost effective ways to have installations that ultimately can create better production, solution. That part of us getting after the demonstrated the customer talking about it and pushing it, so we have marketing campaigns, sales start to pushing our gas lift and we have seen some improved results there, and we expect to see more of that as the sales organization continues to work with closely together.

Our next question comes from Sean Meakim from JPMorgan. Please go ahead.

So, Mark on the billion-dollar program, when you talk about the folks that embrace the plan. How much of their confidence being influence by the recent move in the oil price? I guess nearly that’s you can think about how much you do to visualize the sales portion of the billion dollars with at 70 versus that 55? I think you talked about a third or more of the mix could coming from market share, pricing things like that, and that’s a little bit higher maybe than the original thoughts around the mix. I am just trying to get a sense of how much the macro is driving the confidence?

I would say none. Everything that we are doing, we have been fairly agnostic to what the commodity prices going to be, and it's been more around on the sales side as an example, whole, is thinking more clearly about, okay how we approaching our sales process as we work with customers. Looking at situations where just pull through opportunities for other products and services that we had not traditionally did putting in front of customers to even offer. We have been doing an elasticity models on - of our products, where it feels like that we were not paying close attention to pricing, opportunities that we may have when things are in short supply, we in certain situations our process is around discounting, giving too long - for both to provide discounts, when they usually understand what the product cost is going to be particularly when the customer might ask for the slope changes of the product, of what would be our standard offering. So, there’s a lot of little things around have been really are agnostic to the to what commodity price is and more around how we go to market. And part of the reason, we are doing as because we just fully accepted, a rising high lifts or loads and [indiscernible] yes, with the commodity prices being higher and we feel like we have got our back, I’ll guarantee to some of our competitors and so we’re all out there and equally and so in the end the guy who is going to win this segment, the guy who is going to be first of all has the technology, second of all to who can show the customers and value added solution and we have had that solution competitively priced. And for us so as part of just having the process to bring forward solutions rather than coming to market with individual product launch, to do more of the - to make sure that we were reducing our cost structure, so that we can get our price competitively set and then making sure that we’re disciplined in our approach to go into market to try to get that. And so, all those things are - what’s right now contributing to the opportunities that we see.

Thank you. That certainly sounds constructive. So just then on free cash flow, just curious, I think about some of the - your initial thoughts when you are coming into the sea, when we look at write-downs and working capital north of $600 million. Does that have any influence on your view of how much cash can be harvested from working capital and I think when you’re first coming into Weatherford, you were targeting, the ballpark about $1 billion, just curious kind of how you look at the opportunity to harvest cash from working capital maybe the next year to 2 years?

I think the change in my perspective on working capital isn't that the total amount isn’t ultimately available to us, it is how long it will take us to get there. The issues that we are finding is that we have a lot of things on the balance sheet. We have got a lot of inventories, but then on always inventories are things that are moving quickly in the market, I think as the deep-water complex gets fired up, we are going to see some significant opportunities to bring down inventories. The receivable writes down that accounting changes, our revenue accounting --- matter of what, but we still expect to see continue opportunity across our working capital set that’s still in the line with what I believe is the long-term opportunity that I articulated before. Christoph, do want to add?

No. I think you said it, one small adds to that and I mentioned that before, so we looked in detail through our inventories, they were significant, more potential on inventory and this is on high running current inventory and maybe add to that, we increased our excess inventory provision that does not mean that that inventory is replaced. So, there’s a lot of assets around there which can be sold and lastly, Mark referenced that while we have written up receivables in Venezuela, we surely expect to collect those at one point of time, so that might not be this year or next year, but we expect to collect those one day.

Our next question comes from James West from Evercore ISI. Please go ahead.

Mark, obviously the discussions around the internal changes are positive and interesting, but I wanted to get your boarder perspective on the markets, as we talked last quarter, I know you’re very conservative on 2018, we’ve had a move in oil prices, we have a lot of optimisms spreading kind of around the world in terms of, say the ability of this higher oil price and I think Weatherford, probably more than most benefits from an up cycle, from the emergence of a global up cycle and so I think, it's very important that we keep that in mind that it's not just what's you’re doing internally, but just the cycle work is going to help you, and certainly help you better than others and then if you can give your - I guess outlook we know, North America is on fire, international is starting to come back, how do you see kind of 2018 and really as we may be exit 2018 and going into 2019 and assuming that we can maintain these prices, what is the market start to look like in your view?

That’s a great question, James, obviously, yes, I think that you are absolutely right Weatherford stands to benefit from an international cycle as much as what some of our peers with our TRS business and some of the other things you look outside of North America it’s really sort of a sleeping giant that could do really help us quite a bit. We are approaching 2018 still with some level of reservation and I think that the pricing that we see the marketplace is good and we we’re very encouraged by it, but I think that geopolitical concerns like areas like Venezuela and others attributed to damp for some level of enthusiasm and I think that as I have stated in my remarks I think increase in activity still have a muted effect because that we think that there still be some level of pricing pressure we’re still seeing guidance. Some of our competitor's price under and I think as coming through in as we resource capacity, but prices still they have a muted effect early and as we [indiscernible] of our capacity that doesn’t stop. I mean I think we’re fast approaching that point in time. We’re seeing more discussion around deep water project as I talk with customers they are adding rigs but they are adding one and two and there is still relatively slow. So, our outlook in 2018 international we see more customers renounced of the still land based and we talk about Russia, the Middle East, Argentina I mean we’re very excited about what’s happening in Argentina we are going to be adding spreads and more capacity there in Argentina so that will help Mexico. I think we’ll continue to see some expansion on the projects that we have in Mexico, but deep-water complex to…

Okay, that’s great. Thanks for that and then just a I guess on where to follow up, for either your because somebody wants to take it, but higher market, wide open, why haven’t you hit it yet?

I’ll give you an honest answer, view just all of the results, you saw that, it was a noisy quarter from a financial statement standpoint and I think we needed the opportunity to let the market get out there, walk through just this and then at that I think that once that happens than I think that we’ll be free to make a decision about, whether we go or not.

And thank you all for joining us on today’s call. I will now turn the line back over to the operator. Carrol.

Thank you. This does conclude today’s program, thank you for attending. You may now disconnect.