Geographic Growth Outlook
We discussed our initial thoughts about Weatherford International's (WFRD) Q2 2026 performance in our short article a few days ago. Weatherford believes energy security is driving long-term investment across global oil and gas markets. Management expects these multiyear projects to support gradual, durable growth rather than near-term revenue gains. The company also sees improving industry capacity discipline creating a more constructive pricing environment. Weatherford remains focused on converting these trends into higher free cash flow, margins, and shareholder returns.
Short and Medium-term Outlook
Management expects 2H 2026 margins to improve despite continued Middle East disruptions. The company guided Q3 revenue of $1.105–$1.155 billion and adjusted EBITDA of $235–$265 million, supported by recovering Middle East activity. Weatherford also expects more than $100 million of adjusted free cash flow in the third quarter.
For FY2026, management maintained the midpoint of its EBITDA guidance while raising its free cash flow conversion outlook. The company now expects free cash flow conversion in the mid- to high-40% range for the year. Management remains focused on expanding margins and generating stronger cash flow through 2H 2026.
International Project Update
Weatherford secured multiple deepwater contracts across Brazil, West Africa, Australia, and Nigeria during the quarter. The company also won long-term drilling, completion, and production service contracts in Kuwait, Thailand, and Oman. Management expects several MPD projects to begin contributing revenue in Q4 2026, supporting growth in 2H 2026. The recent awards strengthen Weatherford's position in high-value offshore and international markets. Despite adjusting its second-half guidance, management remains confident in its long-term project pipeline.
NCSM Acquisition Update
Weatherford expects the NCS Multistage acquisition to expand its completions portfolio and strengthen its unconventional business. The acquisition broadens the company's well lifecycle offering and increases exposure to North American and international unconventional markets.
Management also sees significant cross-selling opportunities by leveraging Weatherford's global customer base. The company expects at least $15 million in annual cost synergies within 18 months of closing. Management believes the transaction will enhance margins, cash flow, and long-term growth.
Relative Valuation
WFRD is currently trading at an EV/EBITDA multiple of 7.3x. Based on sell-side analysts' EBITDA estimates, the forward EV/EBITDA multiple is 6.8x. The current multiple is higher than its past five-year average EV/EBITDA multiple of 4.4x.
WFRD's forward EV/EBITDA multiple versus the current EV/EBITDA is expected to contract less steeply than its peers. This implies the company's EBITDA is expected to increase less steeply than its peers' EBITDA in the next year. This typically results in a lower EV/EBITDA multiple. The stock's EV/EBITDA multiple is in line with its peers' (NBR, HP, and LBRT) average. So, the stock is slightly overvalued compared to its peers.
Final Commentary
Weatherford believes energy security will continue to support long-term international oilfield investment. Management expects stronger margins and cash flow in the second half despite ongoing Middle East disruptions. Recent contract awards reinforce the company's growing position in deepwater and international markets. The NCS Multistage acquisition expands Weatherford's unconventional and completions capabilities while supporting future margin growth. The company believes its international project pipeline and technology portfolio position it well for long-term growth. The stock appears overvalued compared to its peers.
