Weatherford International (NYSE:WFT) has become one of the oil and gas services sector's greatest turnaround stories. The company has seen its shares jump 49% during the last year, and there is more to come. Weatherford recently inked a contract with one of the world's largest oil and gas companies, and cost cuts continue to push margins wider. 

Too far too fast
Weatherford is somewhat of a victim of its own expansion plans. During the last decade, Weatherford has made more than 100 acquisitions in an attempt to drive growth. However, these acquisitions have only come back to haunt the company. Weatherford is now being forced to sell acquired businesses and slash jobs in order to rerun to health. 

Unfortunately, over-expansion is not Weatherford's only mistake. The company has also fallen afoul of the law.

Illegal activities
Waterford has been accused of both providing equipment to countries under U.S. sanctions and avoiding taxes. Some of these accusations go back to 2003 and are related to Iraq's "oil for food" program. However, these failings are now behind the company. Management settled with the U.S. government for a sum of $253 million at the end of last year. 

Still, Weatherford is struggling to make up for past mistakes. The group is planning to lay off nearly 10% of its workforce during 2014 in an attempt to stem losses. Additionally, plans are in place to generate between $500 million to $1 billion from asset sales this year.

It seems as if things are working, too, as Weatherford reported net income before charges of $99 million for the first quarter of this year; this is up from a loss of $271 million during the fourth quarter of last year. Including restructuring charges, the company reported a loss for the first quarter.

The company's management believes that earnings in the range of $0.21 to $0.23 are achievable for the second quarter. They gave no guidance on how much these earnings would be affected by restructuring, however.

Game changer
Weatherford has recently signed a game-changing deal. The company has entered into a joint venture agreement with China Oilfield Services and Shengli Highland Petroleum Equipment, forming a new equity joint venture company in China.

The aim of the JV is to combine the complementary strengths of the three companies to tap into the vast unconventional resource base in mainland China. The extraction of tight gas is an area where oil service companies like Weatherford and larger peer Schlumberger Limited (NYSE:SLB) are in demand. 

Schlumberger is working with Yanchang Petroleum within China, and the company had 12 rigs operating within the Ordos basin at the end of the first quarter. Schlumberger did note in the first quarter that due to a lower level of activity from national oil companies (NOCs) within China, 2014 is not going to as profitable as 2013.

That said, the company's invaluable experience in the extraction of shale gas and the optimization of oilfield services should ensure that Schlumberger is put at the top of the list when Chinese NOCs look for contractors.

Foolish summary
All in all, it would appear as if Weatherford is making a rapid recovery. The company has settled with the U.S. government over allegations of wrongdoing and is selling off non-core assets to boost margins and pay down debt. The recently signed deal to operate within China should also catapult Weatherford's earnings higher.