Bernard Duroc-Danner - Chairman, President and Chief Executive Officer Krishna Shivram - Chief Financial Officer Dharmesh Mehta - Chief Operating Officer.

James West - ISI Jim Wicklund - Credit Suisse Ole Slorer - Morgan Stanley Angie Sedita - UBS Brad Handler - Jefferies Byron Pope - Tudor, Pickering & Holt.

Good morning. My name is Laurie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Weatherford International Third Quarter 2014 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session.

(Operator instructions) We ask that you please limit yourself to one question and one follow-up then reenter the queue for any additional questions that you may have. As a reminder, ladies and gentlemen, today’s call is being recorded. Thank you. I would now like to turn the conference over to Mr.

Bernard Duroc-Danner, Chairman, President and Chief Executive Officer. Sir, you may begin your conference..

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

Krishna, please?.

Thank you, Bernard and good morning everyone. I would like to remind our audience that some of today’s comments may include forward-looking statements and non-GAAP financial measures. Please refer to our third quarter press release for the customary caution on forward-looking statements and a reconciliation of non-GAAP to GAAP financial measures.

My comments are going to address the third quarter of 2014 and then the outlook for the fourth quarter. Earnings per share for the third quarter before charges and credits were $0.32.

These earnings were negatively impacted by $0.02, $0.01 due to the North Iraq geopolitical situation and $0.01 due to the intra-quarter divestiture of the rigs business in Russia and Venezuela and the pipeline of specialty services business. Adjusting for these items, our normalized earnings per share were $0.34.

Revenue of $3.9 billion for the quarter increased 4% sequentially and 8% excluding the impact of the divested businesses in both quarters. Operating income margins, before R&D and corporate expenses, improved 145 basis points sequentially to 15.4% and rose 228 basis points versus the third quarter of last year.

Incremental operating income on the sequential revenue increase was 48% and on a year-over-year basis, it was 169%. North America revenue grew 9.3% sequentially, with margins increasing by 92 basis points to 16.1% reflecting the seasonal rebound in Canada and strong growth on U.S. line more than offsetting cost headwinds in the U.S.

pressure pumping business.

The Europe, Caspian, Sub-Sahara Africa, Russia revenue, excluding the revenue of the divested businesses in both quarters, was basically flat, while margins increased by 497 basis points to 21.8% reflecting the strong seasonal recovery in Russia activity coupled with the beneficial impact of divesting the marginally profitable land rigs business with the large reduction in revenue.

The Europe continued its strong activity and in West Africa increased market share with margins contributed positively. Latin America revenue grew 11.3% sequentially, while margins improved by 235 basis points to 14.7%, with improvements principally in Argentina, Brazil and Venezuela more than offsetting continued muted activity levels in Mexico.

Middle East, North Africa, Asia revenue grew 7.2% sequentially with essentially flat margins at 9.4% reflecting the impact of the geopolitical headwinds in North Iraq offsetting improvements in China, Malaysia and Saudi Arabia.

The beneficial impact of cost reductions on the results for the third quarter was $0.09, which is an incremental $0.02 sequentially. The tax rate in the third quarter was 26%. Moving on to the core/non-core analysis now. Our core business revenue of $3.2 billion grew 8% both sequentially and year-over-year.

Our non-core business revenue of $634 million decreased 12% sequentially and was 21% lower year-over-year. Excluding the impact of the divested businesses, our non-core business revenue grew 9% sequentially. Our core business margins increased 141 basis points to 17.9%, while our non-core business margins declined by 70 basis points to 2.8%.

Formation Evaluation margins improved 272 basis points to 11.2%. Well construction margins improved 172 basis points to 27.1%. Completion margins surged by 534 basis points to 27.5%. Artificial lift margins were essentially flat at 17.1%, while stimulation margins declined by 120 basis points to 1.6%.

Moving on to net debt and cash flow now, net debt reduced by $717 million during the third quarter reflecting the receipt of $746 million of divestiture proceeds during the quarter. This was slightly offset by a negative $33 million of free cash flow from operations.

Cash severance and restructuring costs associated with our downsizing programs was $41 million during the quarter. Working capital balances increased by $121 million reflecting increased activity levels. DSO and DSI reduced by 1 day and 2 days respectively with strong collections of $4 billion from customers.

Accounts payables balances continued to decrease despite increased revenue as we have began to renegotiate our procurement terms with suppliers and also to reduce lead times or long lead time for long lead items in order to meet customer schedules.

CapEx of $349 million net of lost-in-hole reflected the investments needed for new incremental core business contract wins principally in Latin America, Sub-Sahara Africa and Europe. These investments will show up in terms of increased revenue and profitability in 2015.

Moving on to the cost reduction efforts, we have officially completed both the reduction in force and the location restructuring programs that were begun early this year. In total 6,283 positions have been eliminated which is expected to realize $462 million of pretax savings on an annualized basis.

In addition, a total of 64 underperforming operating locations have now been shutdown. The combined savings from the now concluded the RIF program and the location cleanup exercise will yield $500 million in pretax annualized saving going forward. In order to effect these cost reduction programs, we recorded a significant level of charges this year.

Third quarter charges of $171 million included these principal items $81 million to restructure North Africa, principally Libya where our activity has effectively halted and $78 million for severance and restructuring charges for the RIF and the location shutdown programs.

Going forward, these exceptional charges will be curtailed as the RIF and location restructure programs are now officially completed, we should not have any severance and restructure charges from these programs.

The only items going forward will be any residual charges for the Iraq EPF contract and certain legal and divestiture costs along with gains and losses on the divestiture of our non-core businesses. You have our commitment on this matter.

Now moving on to the outlook for the fourth quarter, the fourth quarter of 2014 will see an increase in revenue in all regions led by North America on the U.S. land with increasing activity for artificial lift completions, drilling services and pressure pumping. Canada is expected to continue to be robust.

In Latin America we expect strong well construction led growth in Brazil and Argentina, while Mexico will remain subdued. In Sub-Sahara Africa well construction and Formation Evaluation product lines will lead growth offshore.

In Europe well construction activity will increase and in the Middle East, Saudi Arabia and the Gulf countries will continue to grow. These advances will be partly offset by seasonal declines in Russia and Asia after the active summer season further exacerbated by the strong U.S.

dollar and the absence of the divested businesses for the entire quarter. Based on these factors, our fourth quarter earnings per share should range between $0.37 and $0.40. Our previous guidance for the fourth quarter has been adjusted to reflect the following.

A reduction of $0.02 for activity shortfalls due to the continuing geopolitical paralysis in Iraq. A reduction of $0.02 for the divestments of the rigs in Russia and Venezuela and the pipeline and specialty services businesses.

These businesses being more profitable in the second half of the year than in the first half, the full year impact of these divestitures is about $0.05. A reduction of $0.01 for the impact on our earnings due to a much stronger U.S. dollar, principally in Russia, Canada, and the eurozone.

Our tax rate for the fourth quarter of the year will average around the mid 20%s. Lastly, free cash flow from operations for the fourth quarter is expected to be just over $500 million.

This will allow us to close the year with about $100 million of positive free cash flow which, while not a stellar achievement by any standards, is still a major improvement over the previous 2 years.

The principal items that weighed on our free cash flow projections for this year were the delay of the completion of the Iraq Zubair EPF project into the first quarter of 2015 due to the ongoing geopolitical situation, pushing the previously forecasted contract and collections of $250 million into next year and $150 million of higher CapEx, which is now forecast to be $1.4 billion principally to fund growth in the core product lines, where new contract wins in well construction and formation evaluation coupled with long lead times are mandating the CapEx planned in 2014 for revenue streams beginning next year.

Finally, let me give you an update on the status of our divestiture program. During the third quarter, we successfully completed the sale of our rigs in Russia and Venezuela to Rosneft on July 31 in a record time of two weeks between signing and closing.

We also completed the sale of the pipeline and specialty services business to Baker Hughes on August 31. The workstreams to carve out the remaining land drilling rig business remain on track for a 2015 divestiture. We have recently appointed an experienced operating chief of the rigs business and this is consistent with this effort.

We are also making good progress on the divestment of a number of other businesses and we expect to be able to announce at least one additional transaction before the end of the year. In fact, we may announce one transaction imminently within the next week.

At the start of the year, we had targeted $1 billion in divestment proceeds in cash during 2014. We fully expect to achieve or exceed this target. Accordingly, we expect net debt to reduce to between $7 billion and $7.5 billion by the end of this year.

This substantial reduction in net debt significantly de-risks the company compared to the start of the year, with more to come in 2015. With that, I will now turn the call over to Dharmesh to comment on operations..

Thank you, Krishna and good morning everyone. Three important milestones were accomplished during the third quarter. Firstly, operations delivered core revenue growth of 8% sequentially. Secondly, overall operating margins expanded to 15.4% and core margins expanded to 18%.

Thirdly, there was continuous progress demonstrated on safety, quality, and other key efficiency metrics. Core growth. The growth is a result of the technology portfolio at Weatherford and our focus on commercialization of that technology. Key drivers behind the sequential growth are as follows.

Completions growth was driven by a 22% increase in the number of zones completed in the third quarter versus the second quarter and a 340% increase in sales of TruFrac, our new composite bridge plug technology. Wider scale adoption of our sand control technology was also a significant contributor and will yield a 60% growth year-over-year in 2014.

Completions growth was broad-based with sequential revenue growth of 27% in land and 17% in international markets. Artificial lift growth of 9% was driven by the broad technology applications in our production systems portfolio. There are four factors driving the growth.

First, our industry-leading platform with specific applications for sand tolerance, corrosive environments and wells with high gas oil ratios provides a differentiated solution set to our clients and provides the fuel for continued growth. Second, we are able to deploy solutions that increase the well productivity of our clients.

In the Bakken, we have demonstrated a 25% increase in oil production in horizontal wells with the use of our long stroke pumping units. What is even more important is that the production increase appears to be a sustained increase as opposed to a temporary rate acceleration. Third, we are able to have an impact on the economics of shale wells.

Slowing down the decline curve in the first 12 to 24 months can be a game changer for the economics for a shale well. Customer was able to reduce the decline curve and extract higher production using jack lift solutions from Weatherford.

Customer reported an average incremental production of 15,400 barrels for wells having jet pump for 12 months or longer. This translates to net incremental cash flow of more than $1 million per well. The number of horizontal wells continues to grow and we have the ideal portfolio of lift solutions for maximizing production from horizontal wells.

Our customers are using jack lift or gas lift in the early stages of the well followed by the long stroke or commercial rod pumping solutions for enhanced production throughout the life of the well.

The Weatherford production consulting organization works with our clients to not only provide life of well lift solutions, but also ensures that the wells operate efficiently. In one instance, they were able to reduce failure rate of key wells for a customer by 50%.

Further innovation in production technology, coupled with our industry leading manufacturing footprint, will continue to enhance reservoir recovery and production rates and drive growth in artificial lift.

North American Formation Evaluation revenues grew by 14% sequentially as a result of successful technology commercialization for unconventional resource plays.

Our rotary-steerable technology and drilling services, compact technology in wireline and well-site geology in our laboratory group are all seeing strong growth in the unconventional plays in North America. Growth in well construction was also broad based, with every segment contributing to the gains.

What is noteworthy is that the growth was achieved despite loop currents in the Gulf of Mexico and geopolitical events around the world. During the first nine months of the year, our tubular running services business has won contracts for an additional 26 offshore rigs.

During the third quarter, we completed startups for seven rigs, with the remainder coming online over the next several quarters. Core margins increased by 141 basis points sequentially. There are two points on core margin expansion. Formation Evaluation margins have increased from 5% in the first quarter to 11% in the third quarter.

The primary drivers are improved market penetration and higher revenues from new technologies and their successful applications. We expect this trajectory to continue in the fourth quarter and beyond.

While stimulation margins showed improvements in the second quarter, they were not sustained throughout the third quarter, because of steep cost increases in proppants and associated logistics costs. At the end of the third quarter, we have renegotiated pricing on 70% of our U.S.

horsepower and expect revenue and margins to show forward progress in the fourth quarter from the levels delivered in the second quarter. More than 90% of our horsepower is now contracted and more than 90% of all deployed horsepower is working on 24-hour operations.

Our repair of the stimulation business will show progress in the fourth quarter and beyond. Rigs had a negative impact on third quarter performance as 13 rigs were idled due to geopolitical paralysis in Iraq. We have now signed a 3-year day rate contract for 4 rigs for the BP project in Iraq.

And those rigs will be active starting the first quarter of 2015. There is positive movement and activity in Northern Iraq and we expect to have all rigs operational in the first quarter of 2015. Two rigs have exited Iraq and we expect the others to be operational in the first quarter of 2015.

There is no change in our policy of no turnkey contracts in Iraq. Moving on to efficiencies, annual revenue per employee has improved from $225,000 at the beginning of the year to $275,000 by the end of the third quarter, a 22% increase. There is room for additional efficiencies on our fixed cost structure and that effort will continue into 2015.

Our goal is to target an annual revenue of $350,000 per employee through continued efficiencies coupled with core revenue growth. Revenue per headcount is one of 10 key efficiency metrics that we are tracking and a culture of continuous improvement is now in place.

We ended the third quarter with substantially reduced risk in our operational footprint. We now have considerably smaller footprint in geopolitically challenged areas of North Africa, Iraq and Russia. We have substantially completed or exited all turnkey contracts.

Our last remaining EPF project in Iraq, Zubair is 90% complete and is currently scheduled to be completed in the first quarter of 2015. From a contracting discipline and strategy standpoint, we continue to focus on projects and contracts where we offer technology differentiation and attractive value creation for our customers and shareholders.

The entire operations organization is focused on providing our customers with products and services that help mitigate drilling risk, reduce the drilling and completions costs for our clients while deliver increases in efficiency and productivity from their wells and reservoirs.

We have made and will continue to make progress in delivering these products and services with a disciplined and relentless focus on safety and service quality. Our internal safety and quality metrics coupled with feedback from our clients indicate that we have made and continue to make good progress on both fronts.

From an operational perspective our turnaround is positive and firmly on track. I will now turn the call over to Bernard..

company overhead, inclusive of corporate and rationalizing our procurement. On that particular issue, we spent a substantial amount of time on understanding our variable costs. And we have a structured program underway to optimize our variable spend.

Total variable spend, our way of calling procurement, in 17 categories is right now approximately $7 billion. That’s what we will address. Yesterday we have paid down our accounts payables by almost $200 million. Our DPO, days payable outstanding, stand at an all-time low. The early pay down of payables isn’t a random event.

It is part and parcel of the ongoing thrust and detailed negotiations for procurement savings. Overhead and procurement are targeted to deliver combined, about $300 million in cost savings over the next two years. Overhead and procurement will be our two major cost drivers in ‘15 building on the work done in ‘14.

Lastly cash, I am going to echo what Krishna said here. We expect the same sort of progress on free cash flow’14 on ‘15 that we will have had ’13 on ’14. We will provide detailed calibration in the January call of how much and when the quarterly numbers.

With the end of past problems and distractions which again had been a cash drain, we expect free cash flow to become very significant. As Krishna mentioned we are likely to announce at least one other transaction before year end, possibly very soon.

And we will meet or exceed our original 2014 target of $1 billion in cash proceeds for non-core asset sales. The drive to divest non-core assets will continue throughout ’15. With the hire of the leader for rigs we are preparing for ’15 public offering whether IPO or spin of our international contract drilling business.

Given market conditions we would expect an effective issuance in the second half of next year. With the combination of divestments and robust free cash flow in ‘15 and years ahead, our objective remains to lower our net debt to about $4 billion. We want to reach the 25% debt to capitalization ratio and permanently de-risk the company.

We are anxious to focus only on our core as soon as possible, in part because of the high secular growth trends, many of them benefit from and the high margin and returns attributes they have. But in part also we feel this way because of our strong competitive position.

Within our core, roughly 60% of our revenues do not really compete with the three larger integrated service companies. And we have clear technological and market share leadership in those products and service lines.

On the other 40% that will compete, we purposefully developed technological focus with unique proprietary solutions in very specific applications and we have the technological depth and intellectual property position to effectively position ourselves as such. In summary, Weatherford’s direction remains steadfast.

With early progress we are now increasing the intensity. The awareness of a possibly less generous market environment, if only for the very near-term makes us more focused with a leaner cost structure and tighter organization.

We are executing on our financial and operating objectives of returns, driven growth of our core and the de-risking of the enterprise. I will turn the call over to the operator to Q&A now please..

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

Hi, good morning gentlemen..

Good morning Jim..

Hi Jim..

As we think about the divestiture program and great color there on we will see another divestiture in the next – in the near-term maybe the next week be announced, I know you have stated you are in progress on testing and production and the drilling fluids, so I am assuming that’s one of those, but where do you stand with the wellheads business at this point.

And then the other of those two that you are in progress on that may not be announced here shortly?.

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

The wellheads we announced earlier that we are going to defer it into 2015..

Okay. Okay, got it.

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

That’s a difficult question, James, because there are some markets where it is – many of those cores are underrepresented. So, you have to slice it.

But I would say that it’s not unreasonable to expect if we do a proper job of it, very focused on the cores, for the growth rate of the cores to exceed the underlying market rates by a factor of 5% or 10% per annum for a few years, something like that..

Okay, great. Thanks, Bernard..

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

Good morning, guys..

Good morning, Jim..

There is no question you have made a great deal of progress. And more importantly, the pre-open indication for your stock has moved up through the entire conference call. That’s always positive. The biggest issue though that everybody is looking at is your generation of free cash flow. And Krishna, I am not very smart. So, I need some help here.

I have got you shown about negative $665 million and you say you are going to generate $500 million in Q4. And if you could just reconcile that for me and I understand the Zubair billing issue, but Zubair was delayed for a while.

Is that the primary reason for the shortfall in Q3?.

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

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

government payments to be part of operations at all, right..

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

So, that’s why, year-to-date September, we are like negative $400 million and a bit, and we are targeting to generate $500 million in Q4 alone and that will get us to about $100 million positive for the year, which like we said on the call is not stellar.

We are getting our act together on the free cash flow gradually over the years, but the year-over-year performance is impressive and it’s moving directionally in the right place..

Let me add something to help you calibrate how life will be for us next year. What is the difference between this year and next year aside from the market? The difference is there will not be cash severance payments of about $200 million and some change year-to-date. They were for a good cause, but they just won’t happen again. This is Item 1.

Item 2, I hate to load up just one project, because at the end of the day operationally that project is doing well, which is Zubair, but it cost us something like $0.25 billion in self-funding cash, which we will get back when we actually deliver the project late in Q1 to our clients. This is the way the contract was set.

So, $200 million of severance or something like that, $250 million on Zubair, something like that, it’s very, very simple, the math. If everything else remains equal, you have about close to $0.5 billion in cash payments for a good cause, which simply won’t be there next year.

And so you put these things together and you get a very, very simple picture, a very simple picture on what – on how the future looks like for us. And this is why we feel very safe when we talk about a progression similar in ‘15 versus ‘14, like we had ‘14 versus ‘13. It’s actually quite linear. And we hope to do actually a little bit better than that.

I am not sure if that helps..

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

That’s very fair..

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

Yes, that’s very fair. Thank you for that, Dharmesh. Yes, we couldn’t get – our client is operating, so our clients get everything approved by Baghdad. To the extent, there is no Baghdad at the time, nothing happens. Very, very fair also. That’s correct.

It wasn’t an operating mishap as much as it was essentially the fact you had no clients for a period of time or rather our clients didn’t have a partner for a period of time, but hopeful that, that helps, Jim..

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

How did you do that?.

Dharmesh may want to address it..

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

I wasn’t counting that, that’s in….

Alright. No, I think that is very – two key factors are driving it. One is we have very low market share as – by any definition. And what we have been able to do really is on the back of the technology portfolio we have enter into new markets that we were not existing in. So we are seeing some traction in parts. For example the U.S.

shale plays where we did not exist before. And the second is really market share growth which is we are able to deliver wells in faster time, in record time in harsh environments and we are getting rewarded for that..

I will add something else also which is the flip for what Dharmesh said meaning it’s complementary. We also had, you know this and we also had been – started presence in markets where probably didn’t have a future and with very, very poor utilization we were the lowest ring on the ladder with poor pricing, we got out of those markets.

So you have a very, very simple maneuver which is we don’t push where we don’t have no business pushing, we get out of it. So we don’t have negatives. Avoidance of negative does wonders for you. And then on the other hand we push in markets where we actually have natural applications of what we do. What we do is not a concern to me too.

What we do is partly a me too and partly very specific sensing capabilities, so which we are rather unique in having but they only are applicable in certain markets. In other words, they are only useful in certain markets. So that’s we have a combination of getting out of the bad and pushing into good.

This is why you are likely to see a little bit of momentum around Formation Evaluation on the margins until they cross 15% mark. At which point they at least become honorable in terms of returns. Okay..

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

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

Yes. Thank you.

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

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

And the total core is $3.2 billion..

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

20.01% to be specific..

Okay, well that’s in excess of 20% isn’t it. So thanks for clarifying that.

And you have mentioned I think that pressure pumping was at 1.6%?.

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

Okay.

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

Something like that..

Okay. So it’s all looking very good the one sort of number that stands out is Middle East, Asia margins at 10.4% which is the way off what I would imagine that you would feel happy about.

So could you kind of explain us sort of roadmap assuming that there is no material improvement in pricing or the business environment, what will be kind of realistic scenario to get that to a call it a mid-teens margins in line with our rest…?.

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

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

I would say approximately somewhere around 70%, 75% of MENA is core. The balance is a negative number. Now what is the balance, a lot of it is rigs in the Middle East and they have been – as they were recovering, they have been stopped in their recovery in Q3 and Q2 by the way also. They have stopped in their recovery.

I don’t want to sort of harp on that theme too much, but it happens to be a fact. As Dharmesh mentioned, we have right or wrong, more than a dozen rigs in Iraq, make that 13 we did and they were 100% idle. They were idle throughout Q3. They were actually idled part of Q2. They will be idled probably most of Q4 albeit there is movement.

Now, whether we should have as many rigs in Iraq as we do is a very, very I think legitimate question. In a perfect world, the answer is no. Can we have them turnaround to become and be either usefully employed and/or leave the country, yes and yes. But if you look at the negatives that they represented, versus the – they peel out versus the positive.

I will tell you again the core product line this is just a fact. In MENA today, in the Q3 had an operating income margin identical, it is what is it, numbers are what they are, a little over 20%. And the issue is simply, one making rigs do well. Two, peeling it off so that they have their own future.

Again the notion that I tried conveyed it in my comments, not sure I did a good job of it that the non-cores have a future outside of Weatherford, but they are today not only a cash drain in some instances, Zubair of course, but also a distraction is absolutely true.

And the pace and the manner in which we can divest of them intelligently is terribly important for the blossoming of the core. And that is really, you summarize the situation here not in all respects, but in a lot of respects..

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

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

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

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

stimulation I don’t think has been defined yet, and rather not do it now..

Thank you very much, Bernard..

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

It sounds good. Thank you..

Thanks..

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

Thanks. Good morning guys..

Good morning, Angie..

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

I think first of all you are completely right that ideally, we would have not the whole fleet utilized, probably the idea, but just a high utilization rate in places that have no geopolitical overwhelming issues, good day rates and that sort of thing, good operations also is the one set of issues.

This is why we are strengthening the management there that we are announcing the joining of a gentleman to run under rigs this morning as well as our results that’s just part of the process. But we are doing that including the financial side. So this is one set of issues, the operating side.

The second set of issues is and I think the whole year go by, so we have audited numbers, so this year and the prior year’s we have got to be coherent in terms of the financial path for what you are going to issue to the public. Presumably the offering would have audited numbers of ‘14, ‘13 and ‘12, but you have that sort of a frame.

Also cleaning up the legal structure to make sure that everything is the way it should be as a standalone entity. Happily, from an information systems standpoint that’s the only part of Weatherford, which is essentially on a different platform and the rest of Weatherford for historical reasons. We don’t have to work too much on that.

There is the tax aspect also. Want to make sure the company, which will be a multinational company meaning not a U.S. domiciled company also has a proper structure and tax talents and tax planning in place.

All of this is really what’s going on today beyond just making sure that we get out of markets, we have no business being in because we don’t have the mass and the presence and so forth, build where we are strong, make sure the equipment is in fine shape, strengthen the management, because this should be a very good company ultimately, but we are not sort of getting rid of it.

We are setting them free, so they can have a very good future. That’s the whole point. The fact it doesn’t belong with Weatherford doesn’t mean (indiscernible) they can’t have a good future. So, we are working on all of that, which means that some time, let’s say in March-April, we finish our preparation then it becomes a market issue, Angie.

Depends how the market is. We are saying second half, because we don’t know any better, but the reality is we are going to be ready essentially in all respects, let’s say March of next year and then we will see market. Market will be the answer. Hope this is helpful..

Yes, that is helpful.

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

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

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

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

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

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

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

Okay, that’s perfect. That helps.

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

The only thing you had outstanding of course is Zubair, but this is the last quarter?.

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

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

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

Thanks. Good morning guys..

Good morning, Brad..

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

Sure. So, subsequent to the rigs leaving Weatherford in Russia, we have calibrated for you a much smaller presence, which is this year something like $450 million to $500 million worth of service business, pure service – service or products business.

That service or products business is quite different from the rigs business that left insofar as it has good margins. It always had good margins. So, we are left with a much smaller region with much higher margin. This is fact number one.

Now, fact number two, I am not going to tell you something you don’t know already, which is a combination of ruble that went from 32, 33 to 40, 41, Item 1. Item 2, the sanctions. Item 3, oil basically down by $20, $25 which is very relevant for Russia.

All of this put together means that there is no doubt the market in Russia is not as exuberant as it perhaps wanted to be some time ago. You know this already.

What does it mean for us, because I think of – I am very respectful of the sanctions of course but because of a – I think of a very good working relationship we have with a number of clients, we are notwithstanding what I just described.

We are likely to add as we speak approximately I would say $100 million per annum there give and take but approximately $100 million per annum on let’s say $500 million base of incremental service and products business which should be signed and commenced sometime late this year, so make it a full 2015 event.

So for us Russia in ’15 will not be so much a down market. It just won’t be I think as strong of an increase as we had once anticipated. But going from $500 million to $600 million on high margin products and I say higher projects they are all core, while well construction and Formation Evaluation and completions being basically the essence of it.

There is not much artificial lift for us in Russia. So that’s the prognosis. Could it be more than that, I think I don’t know I think today I would say it would be rather contend which is – what I just described. It is coming out of essentially of three accounts of which two in particular in Russia..

Okay, that’s very helpful color. I appreciate that. And actually maybe so helpful that maybe I will just ask about a different country. And if you could speak to Brazil please and your prospects for next year, obviously, you have picked up a lot of managed pressure drilling work, it seems kudos to your technologies for that.

But there are various – potentially there is a stabilizing here of offshore rig count and I guess I am curious for your perspective on your opportunity for next year there?.

Well, I think Brazil and in general the deepwater segment, our markets where ever since we have been able to redirect the company after the end of the great turbulence of ’11 and ’12, we have started scoring.

And its not only which you referred to, it’s just well construction in general, tubule running services, liner hangers, cementation, expandables yes and some managed pressure drilling, you are absolutely right. So Brazil is a case in point. Brazil was never a material market for us, it was a piece of market, but it wasn’t a large market.

We stayed away from Formation Evaluation completely in that market simply because it was crowd and with low margins. And so we focused on the things that could be useful. It just so happens we have more things that are useful for the other client Petrobras primarily than we used to have.

So without getting into any details on what’s the rate of expansion is likely to be for us in Brazil that is let’s say that the largest play today we have in Latin America is actually Argentina, we are close $0.5 billion. Mexico is much smaller. Mexico is not the largest play anymore. Mexico is sort of sitting on the heart of hard idle.

So Argentina is about $0.5 billion and I would say Brazil is roughly $300 million. I think you are likely to see some time over the next 12 months Brazil challenge Argentina in terms of leadership for Latin America. It’s all well construction, all well construction and not only which you referred to.

If that is – and I probably don’t want to give you anymore color than that.

Krishna, do you want to add something?.

I would also like to add that in terms of margins, we are helping ourselves quite a lot in Brazil.

In our quest for growth in the past we were trying to maintain our business presence in all product lines despite the market already being in drilling services for example being distributed among our peers and we had no market share, but we had a pretty large operating base. So we have shutdown all of those things.

So that’s helped the margins significantly along with the well construction growth. So we are now much more focused..

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

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

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

Good morning..

Good morning Byron..

Just quickly you provided some useful color on the core business. And I think you framed 2015 nicely in terms of the revenue growth prospects for the core businesses by your geographic regions.

I was just wondering if you could frame for us how you think about that 2015 growth in terms of which ones lead the charge among your five core businesses in terms of 2015 top line growth drivers?.

It’s pretty easy, because it’s just the dollars are the largest there. Well construction will be – will have the biggest, biggest growth in terms of dollars. And percentage wise, it might actually be challenged by artificial lift, which should have an extremely strong year in 2015 also.

So, I would say in dollars, it would be well construction simply because it’s so big for us, the division as a whole, but in terms of our percentage of – percentage growth other than the dollars, lift might actually be neck and neck, the number one. Lift has very, very, very strong backlog going into ‘15 and widespread..

Okay, thank you. Appreciate it..

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

Thank you..

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