Weatherford International president and CEO Girish Saligram.
The top executive at Weatherford International, who leads a workforce that numbers more than 16,000 employees, is maybe still less well known than the chief executives of comparably sized oilfield service firms (and yes, there are comparably sized and even bigger firms), but his recognition factor is definitely on the increase. Girish Saligram has Weatherford moving on a bold, attention-getting trajectory
Here’s what one industry observer has to say.
“Girish isn’t an oilfield service industry lifer,” said James K. Wicklund, a managing director at investment banking firm PPHB. “He had a real and interesting [career in] manufacturing jobs and other industries before he came in to this one. I think it gave him a perspective that in our industry is rare. He has proven to have more interest in generating financial returns for the shareholders and making the company a more exciting place to work rather than just working for the sake of controlling market share. He pays great attention to detail, but he’s also able to see the big picture and that has helped him lead Weatherford to the envious position of having excellent margins, a strong balance sheet, and leading returns. He’s an amazing guy.”
The strong first quarter that Weatherford had this year is really just the latest step upward in what has been a turnaround that has been years in the making.
In a conversation that this magazine had with Saligram in June, the Weatherford CEO and president described what he thought has been the biggest change, internally, since his arrival there.
“It’s been bringing to the company the clarity of what a North Star is for the organization and then aligning the company to it,” Saligram said. “In our case, our North Star is free cash flow. It’s ensuring that every year we are improving our free cash flow generation, but then making sure that everybody in the company understands what that means for them personally, how their actions, their objectives, all align with and impact that.”
So, how might Weatherford International appear to industry observers today as it might not have appeared to them some years ago?
“I would say we are really driving the company to become a truly technology-differentiated oilfield services company,” Saligram said. “We are very much an oilfield services company for sure, but we are one that differentiates with technology. Our goal is to be a company that delivers better production outcomes for customers.
“And so everything that we do in the business is geared towards that concept—the idea of how do we enable our customers and help them get better production outcomes out of their assets. That’s our role. Our view is the best way to do that is to drive a degree of innovation in our portfolio and our offerings that allow our customers to do things that were never possible before. We have a lot of different examples in the portfolio of how we do that, but that’s really what it is. So the whole company, everything that we do, is geared around that concept.”
It seems to be working. More people are noticing. James West, Managing Director and Head of Energy and Power Research at Melius Research, said, “Girish is a tough but fair leader who came into Weatherford with a clear vision: to fix the mistakes of the past, cut costs, starve underperforming product lines of capital while providing capital where the company has strength, and to get the leverage under control. He is nothing if not persistent, as he chased me to re-establish coverage for over a year until he wore me down! To put it lightly, he has proved to be a huge success and an excellent decision by the board.”
Likewise, J. David Anderson, Managing Director of Energy Services at Barclays, said, “He has been able to completely reset a culture, creating focus that was lacking, and he brought accountability across the organization. The proof is in the numbers—one of the best turnarounds over the past 10 if not 20 years.”
The Permian Matters
Asked what Weatherford, a global firm, sees as the greatest opportunities in this basin, Saligram cites production as his company’s main offering.
“We remain very excited about the U.S. market,” Saligram said. “We are international but the United States is still our single largest country and, within that, the Permian Basin is obviously incredibly important. We’ve got a lot of different things that we do here. We’ve got one of our large super centers that we operate out of in the Permian. Our business here is really focused around production. We do a lot of different elements, starting with artificial lift, but [our work] includes interventions, production optimization, etc. As we look forward, we expect that this is a basin that will continue to require different forms of lift and so we think our lift portfolio is very well positioned for that.
“We are international but the United States is still our single largest country and, within that, the Permian Basin is obviously incredibly important.”
“We’ve got a fabulous suite of digital products, starting with our SCADA systems, our edge controllers, our production optimization platform—ForeSite—that delivers world class capabilities. We’ve got over 4,000 wells that we have assessed over time with the Permian. We’ve got our ForeSite engine running on many of those wells and that really allows us bring the entire capability of field diagnostics to a customer. What we’re also able to do is couple that with our interventions capabilities. So not only can you assess, you can detect things that are an issue and then go and intervene in those as well. In addition, what I’m very excited about is we just announced the acquisition of NCS Multistage and this is a business that has a really nice technology set.
“NCS Multistage is predominantly in the U.S. and Canada today. It’s got some very interesting completions offerings, but also production capabilities with tracer diagnostics.”
The completions side is another area where Weatherford has made “tremendous advances.” He said that the company has taken its already significant capabilities in completions and augmented them with new RFID technology, coupling that with fiber optics.
“That’s allowed us to make some very significant advances, giving a lot of efficiency to our customers,” he said. “And this has been highlighted in a couple of recent awards that we have announced with TotalEnergies in Denmark for an integrated offshore completions system and then most recently with ExxonMobil in Nigeria. So we’re very excited about that.”
Saligram went on to cite other upgrades or additions to Weatherford’s portfolio.
“We are the only oil service company that offers a SCADA system,” he said. “Typically, when an operator wants to get a SCADA system, they would go to a process automation business. We’ve been able to couple our SCADA with an entire suite of edge controllers. This feeds into a variety of different software applications, most notable of which is our production optimization.”
Asked if he feels that the marketplace has truly recognized the gains made by Weatherford and its rising stature, Saligram said he believes that is the case.
“Absolutely,” he said, adding, “Now, it’s always easy—and sometimes tempting—to say, ‘No, they don’t fully perceive it and they really should.’ But I think the team’s done an outstanding job and we’ve got a lot of great support from our investors, our customers. We are winning in the market with our customers. We are also getting a lot of support from our investors. We look at the company today and our multiple has grown over time. It’s not where I would like for it to be. It’s not where I think it deserves to be, but it’s improved a lot. Our agencies have our credit rating at a level that is significantly better today, but it’s still not where it should be, and not where maybe I think it actually deserves to be, but it’s an evolution, right? Look at the company today—our net leverage [net debt] is at order of magnitude 0.4 times. That is way better than many other companies in the sector.
Saligram said that Weatherford’s return on invested capital ranks in the absolute top tier of the industry.
“And to me, that is the most significant metric,” he said. “You look at our EBITDA margins, they compare with the best of the industry. So I think the team’s done a fabulous job of getting the company on the right financial track and footing and that’s obviously led to significant increases in balance sheet capability. We’ve now got… about a billion and a half dollars of liquidity. So liquidity is never a concern for us. We’ve improved our balance sheet very carefully, very respectfully. About two years ago we put a dividend in place. We announced a share buyback program earlier this year. And we raised the dividend by 10 percent, which is a signal of confidence in the company. So I feel really good about where we are.”
He pauses, then adds: “But I’m even more excited about the prospects that we’ve got for the future.”
Jesse Mullins, Editor
Jesse Mullins is editor of Permian Basin Oil and Gas.
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