Weatherford outlines $500 million accounting error

Weatherford International Ltd. announced a $500 million accounting error related to its tax accounting practices for 2007 through 2010, and the oil services firm said it will adjust previously reported financial results as a result.

Paula Dittrick
OGJ Senior Staff Writer

HOUSTON, Mar. 2 -- Weatherford International Ltd. announced a $500 million accounting error related to its tax accounting practices for 2007 through 2010, and the oil services firm said it will adjust previously reported financial results as a result.

Weatherford is reviewing its accounting records and delayed the filing of its annual financial report with the US Securities and Exchange Commission. Weatherford Chief Financial Officer Andrew Becnel said Weatherford plans to file its 10-K report by Mar. 15.

During a conference call on Mar. 2, Becnel called the mistake an “embarrassment” for which the damage is “impossible to quantify” at this time. Executives said the mistake involved calculating tax rates on dividends and was “an internal mistake.” They expect no US government investigation or any tax fines related to the mistake.

Becnel said Weatherford identified “material weakness” in its tax accounting processes that contributed to the mistake being made during 2007 and then subsequently repeated in financial results in following years. “It was an honest mistake,” obviously a significant mistake, he said.

Weatherford executives noted the tax reporting mistake had no effect on the company’s other financial controls.

On another topic, Bernard Duroc-Danner, Weatherford chief executive officer, said political unrest in the Middle East and North Africa is disrupting Weatherford’s operations in Egypt, Libya, Tunisia, Yemen, and Bahrain. Together those countries account for 3% of Weatherford’s revenue.

Duroc-Danner said Weatherford evacuated its non-Libyan employees and secured as much equipment as possible. Outside of Libya, he said he has the “most concern” about Yemen.

Upon questioning from analysts, he said he doubts that Saudi Arabia has potential for the type of civil unrest being experienced elsewhere. He also said he is “guardedly optimistic” that Algeria will not see the same type of unrest as Egypt and Libya.

Contact Paula Dittrick at paulad@ogjonline.com.

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