e424b3
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-128903
PROSPECTUS
26,000,000 Shares
Weatherford International Ltd.
Common Shares
Precision Drilling Corporation, the selling shareholder, will
distribute 26,000,000 of our common shares to its shareholders
under this prospectus. Neither Precision nor we will receive any
proceeds from this distribution.
Our common shares are listed for trading on the New York Stock
Exchange under the symbol WFT.
You should carefully review and consider the information
under the heading Risk Factors beginning on
page 1 of this prospectus.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
The date of this prospectus is November 3, 2005.
TABLE OF CONTENTS
WEATHERFORD INTERNATIONAL LTD.
We provide equipment and services used for drilling, completion
and production of oil and natural gas wells throughout the
world. We conduct operations in approximately 100 countries
and have service and sales locations in nearly all of the oil
and natural gas producing regions in the world. Our offerings
include drilling services and equipment, well installation
services, fishing and intervention services, completion systems
and all forms of artificial lift. We offer step-change
technologies, including expandable technology, production
optimization systems, underbalanced systems and drilling with
casing.
On August 31, 2005, we acquired the Energy Services and
International Contract Drilling divisions of Precision Drilling
Corporation (PDC) in exchange for 26,000,000 of our
common shares and cash of Can $1.13 billion
(approximately US$945 million). The Energy Services
division is a global provider of cased hole and open hole
wireline services, drilling and evaluation services and
production services. The International Contract Drilling
division is an international land rig contractor. The
acquisition included 48 land rigs primarily working in the
Middle East and North Africa and an extensive fleet of
specialized rig transport equipment.
Our principal executive offices are located at 515 Post Oak
Boulevard, Suite 600, Houston, Texas 77027-3415. Our
telephone number at that location is (713) 693-4000.
RISK FACTORS
The securities to be offered by this prospectus may involve a
high degree of risk. When considering an investment in any of
these securities, you should consider carefully the following
factors as well as the other information set forth or
incorporated by reference in this prospectus, including the
risks and other disclosure that are presented in (i) our
Annual Report on Form 10-K for the year ended
December 31, 2004, (ii) our Quarterly Reports on
Form 10-Q for the quarters ended March 31, 2005 and
June 30, 2005, and (iii) our definitive proxy
statement, filed with the SEC on April 4, 2005, under the
headings Forward-looking Statements, Risk
Factors and Exposures.
International Exposure
Like most multinational oilfield service companies, we have
operations in certain international areas, including parts of
the Middle East, North and West Africa, Latin America, the Asia
Pacific region and the Commonwealth of Independent States, that
are subject to risks of war, political disruption, civil
disturbance, economic and legal sanctions (such as restrictions
against countries that the U.S. government may deem to
sponsor terrorism) and changes in global trade policies. Our
operations may be restricted or prohibited in any country in
which these risks occur. In particular, the occurrence of any of
these risks could result in the following events, which in turn,
could materially and adversely impact our results of operations:
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disruption of oil and natural gas exploration and production
activities; |
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restriction of the movement and exchange of funds; |
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inhibition of our ability to collect receivables; |
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enactment of additional or stricter U.S. government or
international sanctions; and |
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limitation of our access to markets for periods of time. |
Currency Exposure
Approximately 35.8% of our net assets are located outside the
U.S. and are carried on our books in local currencies. Changes
in those currencies in relation to the U.S. dollar result
in translation adjustments, which are reflected as accumulated
other comprehensive income in the shareholders equity
section in our Condensed Consolidated Balance Sheets. We
recognize remeasurement and transactional gains and losses on
currencies in our Condensed Consolidated Statements of Income.
Such remeasurement and transactional losses may adversely impact
our results of operations.
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In certain foreign countries, a component of our cost structure
is U.S. dollar denominated, whereas our revenues are
partially local currency based. In those cases, a devaluation of
the local currency would adversely impact our operating margins.
Investment Exposure
We own approximately 21% of the common stock of Universal
Compression Holdings, Inc. (NYSE: UCO). We account for this
ownership interest using the equity method of accounting, which
requires us to record our percentage interest in
Universals results of operations in our consolidated
statements of operations. Accordingly, fluctuations in
Universals earnings cause fluctuations in our earnings.
Litigation and Environmental Exposure
In the ordinary course of business, we become the subject of
various claims and litigation. We maintain insurance to cover
many of our potential losses and we are subject to various
self-retentions and deductibles with respect to our insurance.
Although we are subject to various ongoing items of litigation,
we do not believe any of our current items of litigation will
result in any material uninsured losses to us. However, it is
possible an unexpected judgment could be rendered against us in
cases in which we could be uninsured and beyond the amounts we
currently have reserved or anticipate incurring.
We are also subject to various federal, state and local laws and
regulations relating to the energy industry in general and the
environment in particular. Environmental laws have in recent
years become more stringent and have generally sought to impose
greater liability on a larger number of potentially responsible
parties. While we are not currently aware of any situation
involving an environmental claim that would be likely to have a
material adverse effect on our business, it is always possible
that an environmental claim with respect to one or more of our
current businesses or a business or property that one of our
predecessors owned or used could arise and could involve
material expenditures.
Industry Exposure
The concentration of our customers in the energy industry may
impact our overall exposure to credit risk as customers may be
similarly affected by prolonged changes in economic and industry
conditions. Further, laws in some jurisdictions in which we
operate could make collection difficult or time consuming. We
perform ongoing credit evaluations of our customers and do not
generally require collateral in support of our trade
receivables. While we maintain reserves for potential credit
losses, we cannot assure such reserves will be sufficient to
meet write-offs of uncollectible receivables or that our losses
from such receivables will be consistent with our expectations.
Terrorism Exposure
The terrorist attacks that took place in the U.S. on
September 11, 2001 were unprecedented events that have
created many economic and political uncertainties, some of which
may materially impact our businesses. The potential for future
terrorist attacks, the national and international responses to
terrorist attacks, and other acts of war or hostility have
created many economic and political uncertainties that could
adversely affect our businesses.
Tax Exposure
On June 26, 2002, the stockholders and Board of Directors
of Weatherford International, Inc. approved our corporate
reorganization, and Weatherford International Ltd., a newly
formed Bermuda company, became the parent holding company of
Weatherford International, Inc. The realization of the tax
benefit of this reorganization could be impacted by changes in
tax laws, tax treaties or tax regulations or the interpretation
or enforcement thereof or differing interpretation or
enforcement of applicable law by the U.S. Internal Revenue
Service or other taxing jurisdictions. The inability to realize
this benefit could have a material impact on the Companys
financial statements.
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Acquisition Integration Exposure
In August of 2005, we acquired the Energy Services and
International Contract Drilling divisions of PDC. The divisions
purchased are substantial businesses, and integrating those
businesses with our other operations and product lines will take
significant focus and effort from our management and employees.
The integration of this or any other acquisition we make may
include unexpected costs and temporarily divert attention from
our normal operations. We also cannot be certain that we will
realize anticipated synergies from any acquisition.
Drilling Industry Exposures
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Our new Precision Drilling International division operates
in a competitive and cyclical industry. |
Our acquisition of the international contract drilling division
of PDC included 48 land rigs primarily working in the Middle
East and North Africa and an extensive fleet of specialized rig
transport equipment. The contract drilling business is highly
competitive. Drilling contracts are generally awarded through a
competitive bid process. Price competition, rig availability and
the quality and technical capability of service and equipment
are the most significant competitive factors. If our Precision
Drilling International division is not able to compete with
larger drilling companies, we may not be able to secure the most
lucrative drilling contracts, which could adversely impact this
divisions results of operations.
The drilling industry historically has been cyclical, marked by
periods of low demand, excess rig supply and low dayrates,
followed by periods of high demand, short rig supply and
increasing dayrates. We may be required to idle rigs or to enter
into lower dayrate contracts during future industry downturns.
Lower utilization and dayrates in one or more of the regions in
which we operate would adversely affect the revenues and
profitability of our Precision Drilling International division
and could result in wide fluctuations in this divisions
results of operations from quarter to quarter.
Prolonged periods of low utilization and dayrates could cause us
to recognize impairment charges on our drilling rigs if future
cash flow estimates, based upon information available to
management at the time, indicate that the carrying value of
these rigs may not be recoverable.
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Drilling operations are capital intensive and expose us to
risk of loss of major assets. |
Drilling rigs are major capital assets that require significant
investment to own and maintain. Our drilling contracts generally
allocate to us the risk of loss of our assets in a catastrophe.
Although most of our rigs are insured, we may not be able to
insure them in all cases for reasonable premiums and with
acceptable deductible and other terms.
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The terms of our drilling contracts may result in negative
cash flows or losses during the term of the contract. |
Our contracts generally provide for a basic dayrate during
drilling operations, with lower rates or no payment for periods
of equipment breakdown, adverse weather or other conditions that
may be beyond our reasonable control. During periods of lower
dayrates, our revenues under these contracts may be materially
reduced, although the cost structure is largely fixed, which
could significantly reduce this divisions cash flows and
profitability.
When a rig mobilizes to or demobilizes from an operating area, a
contract may provide for different dayrates, specified fixed
payments or no payment during the mobilization or
demobilization. In some cases, the mobilization or
demobilization rates negotiated in those contracts may not match
the expenses we incur in connection with mobilization or
demobilization, which could negatively impact this
divisions cash flows.
Contracts to employ our drilling rigs have a term based on a
specified period of time or the time required to drill a
specified well or number of wells. The contract term in some
instances may be extended by the customer exercising options for
the drilling of additional wells or for an additional term, or by
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exercising a right of first refusal. An unexpected extension of
an existing contract may preclude us from bidding on another
contract which might have generated greater revenues.
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We may suffer losses if our customers terminate or seek to
renegotiate drilling contracts. |
Certain of our Precision Drilling International divisions
contracts with customers may be cancellable upon specified
notice at the option of the customer. Other contracts require
the customer to pay a specified early termination payment upon
cancellation, which payments may not fully compensate us for the
loss of the contract. Contracts customarily provide for either
automatic termination or termination at the option of the
customer in the event of total loss of the drilling rig or if
drilling operations are suspended for extended periods of time
by reason of acts of God, excessive rig downtime for repairs or
other specified conditions. Early or unexpected termination of a
contract may result in a rig being idle for an extended period
of time without generating revenue, especially if we are not
able to contract the affected rig to another party within a
short period of time. During depressed market conditions, a
customer may no longer need a rig that is under contract or may
be able to obtain a comparable rig at a lower daily rate. As a
result, customers may seek to renegotiate the terms of their
drilling contracts or avoid their obligations under those
contracts, which could adversely affect our results of
operations and cash flows.
Bermuda Governance Risks
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We are a Bermuda exempted company, and it may be difficult
for you to enforce judgments against us or our directors and
executive officers. |
We are a Bermuda exempted company. As a result, the rights of
holders of our shares will be governed by Bermuda law and our
memorandum of association and bye-laws. The rights of
shareholders under Bermuda law may differ from the rights of
shareholders of companies incorporated in other jurisdictions.
One of our directors and some of the named experts referred to
in this report are not residents of the U.S., and a substantial
portion of our assets are located outside the U.S. As a result,
it may be difficult for investors to effect service of process
on those persons in the U.S. or to enforce in the
U.S. judgments obtained in U.S. courts against us or
those persons based on the civil liability provisions of the
U.S. securities laws. Uncertainty exists as to whether
courts in Bermuda will enforce judgments obtained in other
jurisdictions, including the U.S., against us or our directors
or officers under the securities laws of those jurisdictions or
entertain actions in Bermuda against us or our directors or
officers under the securities laws of other jurisdictions.
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Our bye-laws restrict shareholders from bringing legal
action against our officers and directors. |
Our bye-laws contain a broad waiver by our shareholders of any
claim or right of action, both individually and on our behalf,
against any of our officers or directors. The waiver applies to
any action taken by an officer or director, or the failure of an
officer or director to take any action, in the performance of
his or her duties, except with respect to any matter involving
any fraud or dishonesty on the part of the officer or director.
This waiver limits the right of shareholders to assert claims
against our officers and directors unless the act or failure to
act involves fraud or dishonesty.
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Our Bye-laws have anti-takeover provisions that may
discourage a change of control. These anti-takeover provisions
could result in a lower market price for our shares and may
limit a shareholders ability to obtain a premium for our
shares. |
Our bye-laws contain provisions that could make it more
difficult for a third party to acquire us without the consent of
our board of directors, even if the third partys offer may
be considered beneficial by many shareholders. As a result,
shareholders may be limited in their ability to obtain a premium
for their shares and this may cause the market price of our
shares to decrease significantly. These provisions also provide
for:
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directors to be removed only for cause; |
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restrictions on the time period in which directors may be
nominated; and |
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the board of directors to determine the powers, preferences and
rights and the qualifications, limitations and restrictions of
our preference shares and to issue the preference shares without
shareholder approval. |
Our board of directors may issue preference shares and determine
their powers, preferences and rights and their qualifications,
limitations and restrictions. The issuance of preference shares
may delay, defer or prevent a merger, amalgamation, tender offer
or proxy contest involving us.
WHERE YOU CAN FIND MORE INFORMATION
We file reports and other information with the SEC. You may read
our SEC filings at the SECs website at
http://www.sec.gov. You may also read and copy documents
at the public reference room maintained by the SEC at 100 F
Street, NE, Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the public reference
room.
We have filed with the SEC a registration statement on
Form S-3 covering the securities offered by this
prospectus. This prospectus is only a part of the registration
statement and does not contain all of the information in the
registration statement. For further information on us and our
common shares, please review the registration statement and the
exhibits that are filed with it or incorporated by reference.
Statements made in this prospectus that describe documents may
not necessarily be complete. We recommend that you review the
documents we have filed with the registration statement to
obtain a complete understanding of those documents.
The SEC allows us to incorporate by reference the
information we file with them, which means that we can disclose
to you important information contained in other documents filed
with the SEC by referring you to those documents. The
information incorporated by reference is an important part of
this prospectus. Information we later file with the SEC will
automatically update and supersede this information. We
incorporate by reference the documents listed below and any
future filings made with the SEC under Sections 13(a),
13(c), 14, or 15(d) of the Securities Exchange Act of 1934
(the Exchange Act) after the date of this prospectus through the
termination of the registration statement of which this
prospectus is a part. Please read the following documents
incorporated by reference in this prospectus:
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our annual report on Form 10-K for the year ended
December 31, 2004 filed with the SEC on March 11, 2005; |
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the amendment, on Form 10-K/ A, to our annual report for
the year ended December 31, 2004 filed with the SEC on
June 14, 2005; |
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our quarterly reports on Form 10-Q for the quarters ended
March 31, 2005 and June 30, 2005 filed with the SEC on
May 6, 2005 and August 1, 2005; |
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our current reports on Form 8-K filed on January 20,
2005, January 25, 2005, February 18, 2005,
March 7, 2005, March 11, 2005, June 6, 2005 (as
amended June 9, 2005), July 8, 2005, July 28,
2005, August 29, 2005, September 7, 2005 (as amended
November 2, 2005), October 5, 2005, October 27,
2005 and October 31, 2005; |
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The description of our common shares contained in our
Registration Statement on Form 8-A, filed with the SEC on
May 24, 2002; and |
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all documents we file under Section 13(a), 13(c), 14,
or 15(d) of the Exchange Act between the date of this prospectus
and the termination of the registration statement of which this
prospectus is a part. |
If the information in incorporated documents conflicts with
information in this prospectus you should rely on the most
recent information. If the information in an incorporated
document conflicts with information in another incorporated
document, you should rely on the most recent incorporated
document.
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Under no circumstances should the delivery to you of this
prospectus create any implication that the information contained
in this prospectus is correct as of any time after the date of
this prospectus.
You may request a copy of these incorporated documents at no
cost, by writing or telephoning us at the following address:
Weatherford International Ltd., 515 Post Oak Boulevard,
Suite 600, Houston, Texas 77027, Attention: Investor
Relations (telephone number: (713) 693-4000). If you have
any other questions regarding us, please contact our Investor
Relations Department in writing at the above address or at the
above telephone number or visit our world wide web site at
www.weatherford.com. Information on our website is not
incorporated by reference in this prospectus.
SELLING SHAREHOLDER
This prospectus is part of a registration statement that we
filed pursuant to registration rights we granted to PDC under an
agreement we entered into in connection with our acquisition of
the Energy Services and International Contract Drilling
Divisions of PDC.
As part of the consideration we paid for that acquisition, PDC
received 26,000,000 of our common shares or approximately 15.1%
of our issued and outstanding common shares.
PDC has advised us that it will distribute all of the 26,000,000
common shares it holds (the Shares) to its
shareholders using this prospectus. PDC will not receive any
proceeds from the distribution of the Shares.
PLAN OF DISTRIBUTION
PDC has advised us that it intends to distribute the Shares on
or before its planned conversion to an income trust pursuant to
a plan of arrangement in accordance with the Business
Corporations Act (Alberta). Pursuant to that plan of
arrangement, which is subject to shareholder and court approval,
PDC shareholders will receive a pro-rata distribution of the
Shares and cash in addition to trust units in the new income
trust. If the plan of arrangement is not completed, PDC has
advised us that it intends to distribute the Shares to its
shareholders as a pro rata dividend distribution, subject to
regulatory approvals.
In either case, PDC will distribute the Shares as a pro-rata
distribution to its shareholders, and PDC has advised us that
the distribution will not involve brokers or dealers.
Pursuant to PDCs registration rights, we will bear the
costs, expenses and fees of the registration of the Shares,
other than any selling expenses attributable to the sale of
shares, which Precision will bear.
CERTAIN PROVISIONS OF BERMUDA LAW
We have been designated by the Bermuda Monetary Authority as a
non-resident for Bermuda exchange control purposes. This
designation allows us to engage in transactions in currencies
other than the Bermuda dollar, and there are no restrictions on
our ability to transfer funds (other than funds denominated in
Bermuda dollars) in and out of Bermuda or to pay dividends to
United States residents who are holders of our common shares.
The Bermuda Monetary Authority has given its consent for the
issue and free transferability of our shares, up to the amount
of our authorized capital from time to time, to and between
non-residents of Bermuda for exchange control purposes, and the
issue of options, warrants, depository receipts, rights, loan
notes and other of our securities and the subsequent free
transferability thereof, provided our shares remain listed on an
appointed stock exchange, which includes the New York Stock
Exchange. Approvals or permissions given by the Bermuda Monetary
Authority do not constitute a guarantee by the Bermuda Monetary
Authority as to our performance or our creditworthiness.
Accordingly, in giving such consent or permissions, the Bermuda
Monetary Authority shall not be liable for the financial
soundness, performance or default of our business or for the
correctness of any opinions or statements expressed in this
prospectus.
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Certain issues and transfers of shares involving persons deemed
resident in Bermuda for exchange control purposes require the
specific consent of the Bermuda Monetary Authority.
In accordance with Bermuda law, share certificates are only
issued in the names of companies, partnerships or individuals.
In the case of a shareholder acting in a special capacity (for
example, as a trustee), certificates may, at the request of the
shareholder, record the capacity in which the shareholder is
acting. Notwithstanding such recording of any special capacity,
we are not bound to investigate or see to the execution of any
such trust. We will take no notice of any trust applicable to
any of our shares, whether or not we have been notified of such
trust.
LEGAL MATTERS
Certain Bermuda legal matters in connection with the securities
will be passed upon for us by our special Bermuda counsel,
Conyers Dill & Pearman. An employee of that firms
affiliated company, Codan Services Limited, is one of our
assistant secretaries.
EXPERTS
The consolidated financial statements of Weatherford
International Ltd. appearing in Weatherford International
Ltd.s Annual Report (Form 10-K) for the year ended
December 31, 2004 including a schedule appearing therein,
and Weatherford International Ltd. managements assessment
of the effectiveness of internal control over financial
reporting as of December 31, 2004 included therein, have
been audited by Ernst & Young LLP, independent
registered public accounting firm, as set forth in their reports
thereon, included therein, and incorporated herein by reference.
Such consolidated financial statements and managements
assessment are incorporated herein by reference in reliance upon
such reports given on the authority of such firm as experts in
accounting and auditing.
The consolidated financial statements and the related
consolidated financial statement schedule of Universal
Compression Holdings, Inc. (UCH) and Universal
Compression, Inc. as of March 31, 2005 and 2004, and for
each of three years in the period ended March 31, 2005 and
UCH managements report on the effectiveness of internal
control over financial reporting as of March 31, 2005,
incorporated in this prospectus by reference from Universal
Compression Holdings, Inc.s and Universal Compression,
Inc.s Annual Report on Form 10-K for the year ended
March 31, 2005 incorporated by reference in the Annual
Report on Form 10-K/A of Weatherford International Ltd. for
the year ended December 31, 2004, have been audited by
Deloitte & Touche LLP, an independent registered public
accounting firm, as stated in their reports, which are
incorporated herein by reference, and have been so incorporated
in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
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