lalf of U.S. Fracking Companies Will Be Dead or Sold This Year- B...

http://www.bloomberg.com/news/articles/2015-04-22/half-of-u-s-frac..

Half of U.S. Fracking Companies Will Be Dead or Sold This

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by David Wetlte
11:21 AM CDT Apn122, 2015

Half of the 41 :fracking companies operating in the U.S. will be dead or sold by year-end because of slashed spending by oil companies, an executive with
Weatherford International Plc said.

There could be about 20 companies left that provide hydraulic fracturing services, Rob Fulks, pressure pumping marketing director at Weatherford, said in
an interview Wednesday at the IHS CERAWeek conference in Houston: Demand for fracking, a production method that along with horizontal drilling
spurred a boom in U.S. oil and natural gas output, has declined as customers leave wells uncompleted because oflow prices.
There were 61 fracking service providers in the U.S., the world's largest market, at the start oflast year. Consolidation among bigger players began with
Halliburton Co. announcing plans to buy Baker Hughes Inc. in November for $34.6 biJiion and C&J Enetgy Services Ltd. buying the pressure-pumping
business ofNabors Industries Ltd.
Weatherford, which operates the fifth-largest tracking operation in the U.S., has been forced to cut costs "dramaticallyu in response to customer demand,
Fulks said. The company has been able to negotiate price cuts from the mines that supply sand, which is used to prop open cracks in the rocks that allow
hydrocarbons to flow.
Oil companies are cutting more than $100 billion in spending globally after prices fell. Frack pricing is expected to fall as much as 35 percent this year,
according to PacWest, a unit ofiHS Inc.

While many large private-equity firms are looking at tracking companies to buy, the spread between buyer and seller pricing is still too wide for now, Alex
Robart, a principal at PacWest, said in an interview at CERAWeek.
Fulks declined to say whether WeatherfOrd is seeking to acquire other fracking companies or their unused equipment.

"We go by and we see yards are locked up and the doors are closed," he said. "It's not good for equipment to park anything, whether it's an airplane, a
frack pump or a car."

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4/23/2015 4:34PM

the absence of negative and also being able to compete in the markets where we used to be able to compete,
-~'"'.1"'''"' pretty good at it. It's a combination of both and makes for essentially rebuilding our presence. And truly that's all
we are a little bit different than others.

in a similar vein, how should we think about the margin roadmap for land rigs, please?

the land rig business, Bill, has been rebooted under new management and the new management has shaken the product line from
to bottom. It's much more efficiently run today, and we expect that given that the international land rig count is under pressure both
from pricing perspective and also from land rig count perspective, we think that we'll have to exercise extreme cost management to
stay at the mid single digit margins. And that's our goal is right through this year, despite pressures to reduce pricing and lower rig
count, we will expect to maintain at least a mid-single-digit margins through the year.

Bill Herbert
Very good. Thank you, sir.

Bernard Duroc Danner

Thank you.

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

James Wicklund
Hey, guys.

Bernard Duroc Danner

Hi, Jim.

James Wicklund -

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Congrats on a good relative performance and good job I think on addressing the free cash flows you took early. My first queslio'
Bernard, a while back when you were starting with the divestiture program you considered getting rid of pressure pumping.
Considering how much money it's going to lose this year, I know you guys have said that you need to keep it for the validity of you ' ,
completion tool business. Have you rethought that in this market?

Bernard Duroc Danner .- (!&tJ

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Well, I think, we haven't made a decision yet. I think, I will just say that the pressure pumping business needs to be consolidated and
we will not be the ones to do the consolidation. I can tell you that much.

James Wicklund
That's a good thing, that's a good thing.

Bernard Duroc Danner

But it needs to be consolidated and I think just need to have agents of consolidation. Maybe there are agents of consolidation in the
marketplace. Again, it will not be us.

James Wicklund
fhank you. That answers my question. My follow-up, you said that the changes that have to happen must be structural and your focus
rou said was on the efficiency of our support structure. Okay, Halliburton went through Battle Red and Fracto the Future.
3chlumberger is going through a transformational effort and all these seem to be efforts to fix or improve the efficiency of your
mderlying business, not kind of inventing a new tool. How is your jihad on this efficiency of our support structure different or the same
rom what the other guys have gone through?

Crishna Shivra
im, it's actually quite simple to understand. Weatherford historically has been a collection of acquisitions, and they were partly
1tegrated. Some businesses were fully integrated, some were partly integrated. So each business had its own support structure, its
wn way of collecting information in every function, whether it's finance or HR or IT or legal, and etcetera. What we are doing now is
asically completing the integration process, simplifying the work, standardizing everything we do so we need less people to do it. And