* CEO aims for quality growth, better returns
* $1 billion in asset sales set for 2013
* Shares drop 13.2 percent after third-quarter results
Nov 13 (Reuters) - Oilfield services company Weatherford International Ltd will take a much more selective approach to expansion after more than a year of tending to tax problems, its chief executive officer said on Tuesday.
The new focus will be more on returns, CEO Bernard Duroc-Danner said on a call with analysts. “It is a question of choosing the growth we are going to go after,” he said. “It is quality growth as opposed to just growth.”
This represents a notable change in an industry where the world’s biggest companies have spent years expanding their capability to provide more services to clients.
“Do we need to be emphasizing as many product lines as we do with the same degree of both people and capital support?” Duroc-Danner said. “The answer to that question is no.”
He also said that once the tax remediation was complete, he would turn his attention back to selling about $1 billion in assets - a plan that originally emerged in 2011.
Late on Monday, the company reported a decline in pretax earnings for the third quarter and gave a fourth-quarter outlook below market expectations.
Weatherford shares plunged 13.2 percent to $9.44 in morning New York Stock Exchange trading.
The company hopes to complete its tax remediation by the end of this month, drawing a line under a process that has unearthed hundreds of millions of previously unrecognized costs over the past few years and proven a distraction for management.
“The chasm between intent and results continues to be too wide,” Simmons & Co analyst Bill Herbert said. “Reading and dissecting the earnings results will likely lead to the growing sense of unease and alarm associated with this labyrinthine drama.”
Earlier this year, Andy Becnel ended up losing his job as Weatherford’s chief financial officer due to a “material weakness” in internal tax controls, which first surfaced in 2011.
The problem was related to financial reporting on current taxes payable, certain deferred tax assets and liabilities, reserves for uncertain tax positions, and income tax expense. The company has already identified more than $800 million in additional tax charges for the past five years.
As for asset sales, Weatherford did not specify what it would sell, but Wells Fargo analysts said last year that they would be mostly non-oilfield subsidiaries that the company accumulated through acquisitions over the years.
Duroc-Danner said he believed $1 billion was a “reasonable” estimate of the value of the sales over the course of next year, once the tax problems are behind him. “The tax issues took us by surprise and that has been a major distraction,” he said. “Can’t fight more than one war at a time.”