Third-quarter results were discussed by the management team at Weatherford International (NYSE: WFT) Tuesday morning, and many enticing details were provided about the future of this equipment and service provider in the oil and gas industry. Earlier in the third-quarter's earnings season, Weatherford's competitors Baker Hughes (NYSE:BHI), Halliburton (NYSE:HAL) and Schlumberger (NYSE:SLB) provided mixed reviews on how the industry had operated from July through September. Both Baker Hughes and Halliburton experienced a weakened quarter, with the North American market as the main culprit. Because of Schlumberger's dependence on the international market (66.8% of revenues from outside N.A.), it issued the brightest review of the previous three months. Following on Schlumberger's heels, Weatherford displayed operational prowess in both areas, while at the same time it was busy revamping its culture and tactical vision.

Strength of WFT's operations plain to see
Driven by artificial lift and formation evaluation activity, Weatherford increased third-quarter revenues in North America by 7% over the year-ago period. At the operating level (due to internal reporting improvements, only pre-tax financials are available), income fell 16% versus the same period last year, as pricing challenges in the pressure pumping business provided extra gravity on margins. Addressing these margins, confidence is high within management that the pricing pressures will bottom out within the next two quarters, so it is highly likely that North America is about to begin providing solid growth for Weatherford into 2013.

Putting one-time items aside, the international segment performed very well across all regions. The large portion of these items involved percentage of completion contract writedowns in Iraq that helped account for $30 million in losses in the Middle East-North Africa-Asia, or MENA, segment and are expected to have been fully addressed. Looking forward, management believes MENA will "return to being a positive contributor after two years of difficult transition." Partner this optimism with its opinions on the remaining international segments, and Weatherford management is confident that strong growth will be realized in both the near and long terms.

Addressing critical internal issues
Probably the most positive discussions that took place on the conference call were aimed at addressing past shortcomings within the organization regarding inconsistent accounting and reporting measures and the handling of capital allocation. CEO Bernard Duroc-Danner and his team have apparently been going to great lengths to restore the company's reputation after it has come to be viewed as "a company which was not well run." Two of his top agendas include: internal controls surrounding tax/goodwill reporting and capital allocation strategies. He stressed the fact that addressing these issues would not negatively affect the company's operations. In fact, he emphasized the fact that these issues had been masking the exceptional operational capabilities of Weatherford and that now that the issues have been addressed "to the nth degree," investors will finally be able to witness the true "cash generation power of this Company."

What does this mean moving forward?
Tying its industry outlook and management's self-awareness together provides Weatherford with a wide net to capture future growth potential. Strength in all regions is seen to continue with those that had experienced recent weakness set to experience a turnaround within six months to a year. These gains are expected at both the top line and in margin expansion. Sales growth is seemingly undeniable with this ever-growing market and Weatherford's strong operational reputation. Supplement this with the fact that management is dead-set on targeting both the "shameful" issues surrounding tax/goodwill accounting and actively doling out capital to its most profitable business segments; its all-around success is likely to finally shine through.

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