WEATHERFORD INTERNATIONAL LTD - 10-Q Quarterly Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2002

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission file number 1-31339

WEATHERFORD INTERNATIONAL LTD.
-------------------------------
(Exact name of Registrant as specified in its Charter)

Bermuda 98-0371344
- -------------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

c/o Corporate Managers (Barbados) Ltd.
First Floor, Trident House
Lower Broad Street
Bridgetown, Barbados None
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)

(246) 427-3174
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(Registrant's telephone number, include area code)

- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes X No
--- ---

Indicate the number of shares outstanding of each of the issuer's classes
of common shares, as of the latest practicable date:

Title of Class Outstanding at August 9, 2002
-------------- -----------------------------
Common Shares, par value $1.00 119,670,013

EXPLANATORY STATEMENT

Weatherford International Ltd., a Bermuda exempted company (which we
refer to as Weatherford Bermuda in this explanatory statement), is filing this
Quarterly Report on Form 10-Q as successor to Weatherford International, Inc., a
Delaware corporation (which we refer to as Weatherford Delaware in this
explanatory statement). On June 26, 2002, Weatherford Bermuda became the parent
holding company of Weatherford Delaware as the result of a corporate
reorganization effected through the merger of a subsidiary with and into
Weatherford Delaware. Each share of Weatherford Delaware issued immediately
prior to the effective time of the merger automatically converted into the right
to receive a common share of Weatherford Bermuda. Thus, the stockholders of
Weatherford Delaware became the shareholders of Weatherford Bermuda which,
together with its subsidiaries, continues to be engaged in the same business
that Weatherford Delaware and its subsidiaries were engaged in before the
merger. For periods prior to June 26, 2002, please refer to the periodic and
other reports filed with the Securities and Exchange Commission by Weatherford
Delaware (Commission File No. 001-13086) prior to June 26, 2002.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PAR VALUE)

The accompanying notes are an integral part of these condensed
consolidated financial statements.

1

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

The accompanying notes are an integral part of these condensed
consolidated financial statements.

2

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)

The accompanying notes are an integral part of these condensed
consolidated financial statements.

3

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(IN THOUSANDS)

The accompanying notes are an integral part of these condensed
consolidated financial statements.

4

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. GENERAL

Effective June 26, 2002, Weatherford International Ltd. ("Weatherford
Limited"), a newly formed Bermuda company, became the parent holding company to
Weatherford International, Inc. ("Weatherford Delaware") following a corporate
reorganization (See Note 2). The condensed consolidated financial statements of
Weatherford Limited and subsidiaries (the "Company") included herein are
unaudited; however, they include all adjustments of a normal recurring nature
which, in the opinion of management, are necessary to present fairly the
Company's Condensed Consolidated Balance Sheet at June 30, 2002, Condensed
Consolidated Statements of Income and Condensed Consolidated Statements of
Comprehensive Income for the three and six months ended June 30, 2002 and 2001,
and Condensed Consolidated Statements of Cash Flows for the six months ended
June 30, 2002 and 2001. Although the Company believes that the disclosures in
these financial statements are adequate to make the interim information
presented not misleading, certain information relating to the Company's
organization and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States has been condensed or omitted in this Form 10-Q pursuant to
Securities and Exchange Commission rules and regulations. These financial
statements should be read in conjunction with the audited consolidated financial
statements for the year ended December 31, 2001 and the notes thereto included
in Weatherford International, Inc.'s Annual Report on Form 10-K. The results of
operations for the three and six month periods ended June 30, 2002 are not
necessarily indicative of the results expected for the full year.

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
certain estimates, judgments and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.

Certain reclassifications of prior year balances have been made to conform
such amounts to corresponding current year classifications.

2. CORPORATE REORGANIZATION

Effective June 26, 2002, Weatherford Limited became the parent holding
company of Weatherford Delaware following a corporate reorganization. The
reorganization was accomplished through a merger of a newly formed subsidiary
into Weatherford Delaware. Weatherford Delaware, the surviving company,
continues to exist as an indirect, wholly owned subsidiary of Weatherford
Limited. Weatherford Limited and its subsidiaries continue to conduct the
business previously conducted by Weatherford Delaware and its subsidiaries. The
reorganization has been accounted for as a reorganization of entities under
common control, and accordingly, it did not result in any changes to the
consolidated amounts of assets, liabilities or shareholders' equity.

Upon consummation of the merger, the shares of Weatherford Delaware common
stock automatically converted into the right to receive Weatherford Limited
common shares. The authorized share capital of Weatherford Limited consists of
(1) 500,000,000 common shares, $1.00 par value ("Common Shares") and
(2) 10,000,000 undesignated preference shares, $1.00 par value. In the
merger, Common Shares were issued to holders of Weatherford Delaware common
stock. None of the preference shares have been issued.

In conjunction with the merger, Weatherford Limited fully and
unconditionally guaranteed the following obligations of Weatherford Delaware:
(1) the three-year multi-currency revolving credit facility, (2) the five-year
unsecured credit agreement, (3) the $200.0 million 7 1/4% Senior Notes due 2006
(the "7 1/4% Senior Notes"), (4) the $350.0 million 6 5/8% Senior Notes due
2011, (5) the Zero Coupon Convertible Senior Debentures due 2020 (the "Zero
Coupon Debentures") and (6) the 5% Convertible Subordinated Preferred Equivalent
Debentures due 2027 (the "Convertible Preferred Debentures"). In addition,
Weatherford Limited and Weatherford Delaware fully and unconditionally
guaranteed certain domestic subsidiaries' performance obligations relating to
the asset securitization (See Note 6), including their payment obligations.

All of the steps necessary to effect the reorganization for U.S. federal
corporate income tax purposes were not complete as of June 30, 2002; therefore,
the income tax provision for the three and six months ended June 30, 2002 does
not reflect any tax benefits from the reorganization. Had all steps been
completed prior to June 30, 2002, the benefits would have been reflected in the
tax rate for the periods presented.

5

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

In connection with the reorganization, the Company incurred $4.5 million,
$3.0 million after tax, in transaction-related expenses during the three and six
months ended June 30, 2002. The transaction expenses relate to professional
services and are reflected in Corporate General and Administrative Expenses in
the accompanying Condensed Consolidated Statements of Income.

3. GOODWILL

In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other
Intangible Assets. SFAS No. 142 provides for the non-amortization of goodwill
and other intangible assets with indefinite lives and requires that such assets
be tested for impairment at least on an annual basis. The Company adopted SFAS
No. 142 effective January 1, 2002 and has applied the non-amortization
provision. During the second quarter of 2002, the Company completed the
transitional goodwill impairment test prescribed in SFAS No. 142 with respect to
existing goodwill at the date of adoption. The transitional goodwill impairment
test involved a comparison of the fair value of each of the Company's reporting
units, as defined under SFAS 142, with its carrying amount. As the carrying
amount of each reporting unit did not exceed its fair value, none of the
Company's goodwill was impaired.

The following table provides comparative net income and earnings per share
information had the non-amortization provision been in effect for all periods
presented:

4. INTANGIBLE ASSETS

The Company has trademarks associated with its 2001 acquisition of the
Johnson Screens division from Vivendi Environnement, which are considered to
have indefinite lives as the Company has the ability and intent to renew
indefinitely. These trademarks are classified in Other Intangible Assets, Net on
the accompanying Condensed Consolidated Balance Sheets and had a carrying value
of $8.0 million at June 30, 2002 and $9.7 million at December 31, 2001. The
estimated fair market value of intangible assets obtained through acquisitions
are based on preliminary information which is subject to change when final
valuations are obtained.

6

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

The Company amortizes identifiable intangible assets, excluding goodwill
and indefinite-lived intangibles, on a straight-line basis over the years
expected to be benefited, ranging from 3 to 20 years. The components of these
other intangible assets are as follows:

Amortization expense was $4.0 million and $6.3 million for the three and
six months ended June 30, 2002, respectively. Estimated amortization expense for
the carrying amount of intangible assets as of June 30, 2002 is expected to be
$9.4 million for the remainder of 2002, $18.0 million for 2003, $17.7 million
for 2004, $16.9 million for 2005 and $15.9 million for 2006.

On March 1, 2002, the Company obtained a worldwide license to Shell
Technology Ventures' ("Shell") expandable technology. Expandable technology
refers to both slotted and solid expandables, related tools and accessories and
specialized expansion systems. Under the terms of the agreement, the Company
received a global license to Shell's existing and future expandable tubular
intellectual property and immediate access to the U.S. market for use of its
Completion Systems Division's Expandable Sand Screen (ESS(TM)) system for
consideration that included $65.0 million in cash, a $20.0 million promissory
note and $60.0 million of warrants to purchase Common Shares. The $20.0 million
promissory note is classified as Short-Term Borrowings and Current Portion of
Long-Term Debt on the accompanying Condensed Consolidated Balance Sheets. In
addition, the Company received a 50% reduction in the royalty rate it
historically paid on Shell licensed technology sales. This license is being
amortized over the life of the agreement, which is 17 years.

5. INVENTORIES

Inventories by category are as follows:

Work in process and finished goods inventories include the cost of
material, labor and plant overhead.

6. ASSET SECURITIZATION

In July 2001, Weatherford Delaware entered into a one-year agreement with a
financial institution to sell, on a continuous basis, an undivided interest in a
specific pool of domestic accounts receivable of Weatherford Delaware and its
subsidiaries. The one-year term was extended through August 2002, and
Weatherford Delaware is currently in the process of renewing this agreement.
Weatherford Delaware is permitted to securitize up to $150.0 million under this
agreement. If Weatherford Limited's or Weatherford Delaware's credit rating
falls below BBB- from Standard and Poor's or Baa3 from Moody's, the financial
institution has no further obligation to purchase the accounts receivables. In
connection with the reorganization, Weatherford Limited and Weatherford Delaware
fully and unconditionally guaranteed certain domestic subsidiaries' performance
obligations relating to the asset securitization, including their payment
obligations.

7

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Weatherford Delaware currently pays a program fee on participating interests at
a variable rate based on the financial institution's commercial paper rate plus
other fees. Program fees totaled $0.6 million and $1.3 million for the three and
six months ended June 30, 2002, respectively and are included in Interest
Expense, Net on the accompanying Condensed Consolidated Statements of Income.
Weatherford Delaware had received $90.7 million for purchased interests as of
June 30, 2002 and $140.8 million as of December 31, 2001.

7. SHORT-TERM DEBT

In April 2001, Weatherford Delaware entered into a $250.0 million,
three-year multi-currency revolving credit facility, with commitment capacity of
up to $400.0 million. As of June 30, 2002, the Company had $186.0 million
available under this agreement.

Weatherford Delaware entered into a five-year unsecured credit agreement in
May 1998, which provides for borrowings of up to an aggregate of $250.0 million,
consisting of a $200.0 million U.S. credit facility and a $50.0 million Canadian
credit facility. As of June 30, 2002, the Company had $65.7 million available
under this facility due to amounts outstanding and $34.3 million being used to
secure outstanding letters of credit.

The Company also engages in unsecured short-term borrowings with various
institutions pursuant to uncommitted facilities. As of June 30, 2002, the
Company had $54.2 million in unsecured short-term borrowings outstanding under
these arrangements with interest rates ranging from 1.09% to 8.25%.

8. INTEREST RATE SWAPS

As of June 30, 2002, the Company had in effect two interest rate swap
agreements, entered into on November 15, 2001 and January 8, 2002, to reduce the
Company's exposure to changes in the fair value of the 7 1/4% Senior Notes and
to take advantage of interest rates available in the current economic
environment. Under these agreements, on May 15 and November 15 of each year
until maturity, the Company will receive interest at the fixed rate of 7 1/4%
and will pay floating rate based on 6-month LIBOR. The hedges are considered
perfectly effective against changes in the fair value of the debt due to changes
in the benchmark interest rate over its term. In accordance with SFAS No. 133,
the shortcut method applies and there is no need to periodically reassess the
effectiveness of the hedge during the term of the swaps. The swap agreements are
recorded at fair market value and classified in Other Assets and Other
Liabilities with the offset to Long-Term Debt on the accompanying Condensed
Consolidated Balance Sheets. The aggregate fair market value of the swaps was a
net asset of $2.9 million as of June 30, 2002.

9. EARNINGS PER SHARE

Basic earnings per share for all periods presented equals net income
divided by the weighted average number of Common Shares outstanding during the
period. Diluted earnings per share is computed by dividing net income, as
adjusted for the assumed conversion of dilutive debentures, by the weighted
average number of Common Shares outstanding during the period adjusted for the
dilutive effect of the Company's outstanding stock options, restricted stock
and the incremental shares for the assumed conversion of dilutive debentures.

8

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Diluted earnings per share for the three and six months ended June 30, 2002
and June 30, 2001 reflects the assumed conversion of the Zero Coupon Debentures,
as the conversion of these debentures in those periods would have been dilutive.
Net income for the diluted earnings per share calculations for those periods is
adjusted to add back the amortization of original issue discount, net of taxes,
related to the Zero Coupon Debentures.

Diluted earnings per share for the three and six months ended June 30, 2001
reflects the assumed conversion of the Convertible Preferred Debentures in the
quarterly periods in which the conversion would have been dilutive. Net income
for the diluted earnings per share calculations for those periods is adjusted to
add back the interest expense, net of taxes, related to the Convertible
Preferred Debentures. The effect of the Convertible Preferred Debentures on
diluted earnings per share is antidilutive for the three and six months ended
June 30, 2002 and, thus, had no impact.

The following reconciles net income to adjusted net income, adjusting for
the impact of assumed conversion of dilutive debentures:

The following reconciles basic and diluted weighted average shares
outstanding:

10. SUPPLEMENTAL CASH FLOW INFORMATION

The following summarizes investing activities relating to acquisitions
integrated into the Company for the periods shown:

9

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

During the six months ended June 30, 2002, there were noncash-investing
activities of $8.6 million related to the receipt of 187,094 Common Shares
initially issued in the 2001 acquisition of Orwell plc. The shares were received
as a settlement, of a purchase price adjustment.

During the six months ended June 30, 2002 and 2001, there were
noncash-financing activities of $12.7 million and $7.0 million, respectively,
relating to tax benefits received from the exercise of nonqualified stock
options. These benefits were recorded as a reduction of income taxes payable and
an increase to Capital in Excess of Par Value on the accompanying Condensed
Consolidated Balance Sheets. During the six months ended June 30, 2002, there
were additional noncash-financing activities related to Weatherford Delaware's
interest rate swaps of $6.0 million (See Note 8).

11. SEGMENT INFORMATION

Business Segments

The Company is a diversified international energy service and manufacturing
company that provides a variety of services and equipment to the exploration,
production and transmission sectors of the oil and gas industry. The Company
operates in virtually every oil and gas exploration and production region in the
world. The Company divides its business segments into three separate groups as
defined by the chief operating decision maker: Drilling and Intervention
Services, Completion Systems and Artificial Lift Systems. The Company also
historically operated a Compression Services segment, which was merged into a
subsidiary of Universal Compression Holdings, Inc. ("Universal") on February 9,
2001 in exchange for 13.75 million shares of Universal common stock. The amounts
reported for this segment include results through the date of the merger.

The Company's Drilling and Intervention Services segment provides a wide
range of oilfield products and services, including downhole drilling and
intervention services, proprietary drilling equipment and rentals, well
installation services, cementing products and underbalanced drilling services.

The Company's Completion Systems segment provides completion products and
systems including expandable systems, intelligent well technology, packers,
liner hangers, well screens, flow control and inflatable packers.

The Company's Artificial Lift Systems segment designs, manufactures, sells
and services a complete line of artificial lift equipment, including progressing
cavity pumps, reciprocating rod lift systems, gas lift systems, electrical
submersible pumps, hydraulic lift systems and other lift systems. This segment
also offers well optimization, remote monitoring and control services and
non-oil and gas screens.

The Company's Compression Services segment historically packaged, rented
and sold parts and provided services for gas compressor units over a broad
horsepower range.

10

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Financial information by industry segment for each of the three and six
months ended June 30, 2002 and 2001 is summarized below. The accounting policies
of the segments are the same as those of the Company.

(a) The Company evaluates performance and allocates resources based on EBITDA,
which is calculated as operating income adding back depreciation and
amortization. Calculations of EBITDA should not be viewed as a substitute
to calculations under accounting principles generally accepted in the
United States, in particular cash flows from operations, operating income
and net income. In addition, EBITDA calculations by one company may not be
comparable to those of another company.

(b) Includes Equity Earnings of Unconsolidated Affiliates.

As of June 30, 2002, total assets were $2,008.6 million for Drilling and
Intervention Services, $1,017.1 million for Completion Systems, $928.8 million
for Artificial Lift Systems and $600.1 million for Corporate. Total assets as of
December 31, 2001, were $1,976.4 million for Drilling and Intervention Services,
$863.9 million for Completion Systems, $920.5 million for Artificial Lift
Systems and $535.6 million for Corporate.

Net goodwill as of June 30, 2002 was $604.4 million for Drilling and
Intervention Services, $420.6 million for Completion Systems and $376.5 million
for Artificial Lift Systems. As of December 31, 2001, net goodwill was $593.0
million for Drilling and Intervention Services, $421.8 million for Completion
Systems and $368.5 million for Artificial Lift Systems. Amounts included in
goodwill related to recent acquisitions are based on preliminary information and
are subject to change when final information is obtained.

11

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

12. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

As part of the June 26, 2002 reorganization, Weatherford Limited ("Parent")
guaranteed, on a full and unconditional basis, certain indebtedness of its
wholly owned subsidiary, Weatherford Delaware ("Issuer") (See Note 2). The
following unaudited condensed consolidating financial information for Parent and
Issuer and all other subsidiaries has been provided.

CONDENSED CONSOLIDATING BALANCE SHEET
JUNE 30, 2002
(UNAUDITED)
(IN THOUSANDS)

12

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

12. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (CONTINUED)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2002
(UNAUDITED)
(IN THOUSANDS)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2002
(UNAUDITED)
(IN THOUSANDS)

13

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

12. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (CONTINUED)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2002
(UNAUDITED)
(IN THOUSANDS)

14

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

GENERAL

Effective June 26, 2002, Weatherford International Ltd., a newly formed
Bermuda company, became the parent holding company to Weatherford International,
Inc. following a corporate reorganization. The reorganization has been accounted
for as a reorganization of entities under common control and accordingly, it did
not result in any changes to our consolidated amounts of assets, liabilities or
shareholders' equity.

Our business is conducted through three principal operating divisions: (1)
Drilling and Intervention Services, (2) Completion Systems and (3) Artificial
Lift Systems. In addition to these operations, we historically operated a
Compression Services Division. On February 9, 2001, we completed the merger of
essentially all of our Compression Services Division into a subsidiary of
Universal Compression Holdings, Inc. in exchange for 13.75 million shares of
Universal, or approximately 45% of Universal's outstanding common stock.

The following is a discussion of our results of operations for the three
and six months ended June 30, 2002 and 2001. This discussion should be read in
conjunction with our financial statements that are included with this report and
Weatherford International, Inc.'s financial statements and related Management's
Discussion and Analysis of Financial Condition and Results of Operations for the
year ended December 31, 2001 included in Weatherford International, Inc.'s
Annual Report on Form 10-K.

This discussion of our results and financial condition includes various
forward-looking statements about our markets, the demand for our products and
services and our future results. These statements are based on certain
assumptions that we consider reasonable. For information about these
assumptions, you should refer to the section entitled "Forward-Looking
Statements."

We acquire numerous companies every year and focus on integration efforts
so that we may realize the benefits each acquisition provides. We are therefore
unable to provide certain information regarding our results excluding the impact
of acquisitions due to the integration of these acquisitions into our
operations. Comparative three months and six months revenue trends excluding
acquisitions only exclude those 2001 acquisitions for which revenue information
has been separately maintained. All 2002 acquisitions have been fully integrated
and we are therefore unable to exclude the impact of those acquisitions.

MARKET TRENDS AND OUTLOOK

Our businesses serve the oil and gas industry. All of our businesses are
affected by changes in the worldwide demand and price of oil and natural gas.
Certain of our products and services, such as our well installation services and
well completion services, are dependent on the level of exploration and
development activity and particularly on the completion phase of the well
lifecycle. Other products and services, such as our artificial lift systems, are
dependent on production activity. We currently estimate that around two-thirds
of our operations are reliant on drilling activity, with the remainder focused
on production and reservoir enhancement activity.

The following chart sets forth certain statistics that are reflective of
historical market conditions:

(1) Price per barrel of West Texas Intermediate crude oil as of June 30 and
December 31 - Source: Applied Reasoning, Inc.

(2) Price per MM/BTU as of June 30 and December 31 - Source: Oil World

(3) Average rig count for the applicable month - Source: Baker Hughes Rig Count

15

The oil and gas industry has been subject to extreme volatility in the last
few years. During 2000, due to the supply and demand imbalances that caused the
increase in the price of oil and gas, we experienced steady improvements in the
demand for our products and services, which continued through the first seven
months of 2001.

In the U.S., rig activity began to decline in the third quarter of 2001.
The U.S. rig count peaked at 1,293 rigs in July 2001 and declined to a low of
738 rigs in April 2002. Since April, we have seen marginal increases in the rig
count and by July 2002, the U.S. rig count had improved to 859 rigs. Natural gas
prices declined from a high of $9.82 per mcf in 2001 to a low of $1.91 in late
January 2002 and increased to $2.95 by the end of July. The slight increase in
rig count indicates a possible initial sign of recovery; however, we expect any
recovery to be at a slow pace and segmented between regions throughout the
United States.

Drilling activity outside North America is somewhat less volatile than the
North American market. Due to the significant investment and complexity
surrounding international projects, drilling decisions relating to such projects
tend to be evaluated and monitored with a longer-term perspective in regard to
oil and natural gas pricing as most contracts span two to three years. Overall,
international rig activity remained relatively constant throughout 2001 and has
decreased slightly during the second quarter of 2002, from a monthly average of
766 in September 2001 to 730 in June 2002. Our customers' international spending
is expected to improve modestly during 2002; however, we expect international
demand for our products and services to exceed the expected industry-wide
increase in international market activity, as we leverage our technology
offerings and expand our market share. In general, we expect the markets and our
business strategies to affect our businesses as follows:

DRILLING AND INTERVENTION SERVICES AND COMPLETION SYSTEMS. These divisions
are expected to see slight improvements in the third quarter and through
year-end as compared to the first half of the year in the Eastern Hemisphere
markets, with the exception of the United Kingdom and Norway, where we
anticipate depressed activity through the fourth quarter. We expect the increase
in revenue will be supported by increased activity, as well as market share
gains through our technology product offerings, specifically underbalanced
drilling systems and expandable products. We expect our Latin American
operations to remain flat, compared to current levels, throughout the remainder
of 2002 while U.S. markets are expected to recover slightly with improvements
predominantly occurring in the fourth quarter.

ARTIFICIAL LIFT SYSTEMS. Our Artificial Lift Systems Division will continue
to see revenue improvements in the Eastern Hemisphere markets on a year-on-year
basis as we leverage our global footprint. We anticipate the Latin American
markets will remain depressed throughout the remainder of the year. We expect
slight improvements in North America, supported by higher demand with respect to
heavy oil production activities in Canada. This division is also expected to
continue to benefit from any shift in priority that our customers place on oil
projects rather than natural gas projects in light of the low natural gas
prices.

Overall, the level of market improvements for our businesses in 2002 will
continue to be heavily dependent on the timing and strength of the recovery in
the North American markets, our gains in market share outside North America and
the acceptance of our new technologies. Although we believe that the activity
levels in the North American markets may be in the early stages of recovery, the
speed and extent of any recovery is difficult to predict in light of the
volatile nature of our business. In addition, the continued strength of the
industry is uncertain and will be highly dependent on many external factors,
such as world economic conditions, member country compliance with Organization
of Petroleum Exporting Countries quotas and weather conditions. The extreme
volatility of our markets makes predictions regarding future results difficult.

16

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of our financial condition and results of
operations are based upon our condensed consolidated financial statements. We
prepare these financial statements in conformity with accounting principles
generally accepted in the United States. As such, we are required to make
certain estimates, judgments and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the periods presented. We base our
estimates on historical experience, available information and various other
assumptions that we believe to be reasonable under the circumstances. On an
on-going basis, we evaluate our estimates, including those related to bad debts,
inventory, investments, intangible assets and goodwill, income taxes and
contingent liabilities. Actual results may differ from these estimates under
different assumptions or conditions. The accounting policies that we believe are
the most critical to our reporting of results of operations and financial
position are as follows:

Accounts Receivable

We perform ongoing credit evaluations of our customers and adjust credit
limits based upon payment history and the customer's current credit worthiness,
as determined by our review of their current credit information. We continuously
monitor collections and payments from our customers and maintain a provision for
estimated uncollectible accounts based upon our historical experience and any
specific customer collection issues that we have identified. While such credit
losses have historically been within our expectations and the provisions
established, we cannot give any assurances that we will continue to experience
the same credit loss rates that we have in the past. The cyclical nature of our
industry may affect our customers' operating performance and cash flows, which
could impact our ability to collect on these obligations. In addition, many of
our customers are located in certain international areas that are inherently
subject to risks of economic, political and civil instabilities, which may
impact our ability to collect these accounts receivables.

Equity Investments

Our equity investments in unconsolidated subsidiaries primarily include our
investment in Universal. We review our equity investments for impairment and
record an adjustment when we believe the decline in fair value is other than
temporary. The fair value of the asset is measured using quoted market prices
or, in the absence of quoted market prices, fair value is based on an estimate
of discounted cash flows. In determining whether the decline is other than
temporary we consider the cyclicality of the industry in which the investment
operates, its historical performance, its performance in relation to its peers
and the current economic environment. Future conditions in the industry,
operating performance and performance in relation to peers and the future
economic environment may vary from our current assessment of recoverability.
Such future conditions could therefore result in a determination that the
decline in fair value is other than temporary. Universal's stock price is
currently depressed. If we determine the decline is other than temporary, we
would be required to record a write-down in the carrying value of our asset to
the then current fair market value.

Goodwill and Other Intangible Assets

We adopted Statement of Financial Accounting Standard ("SFAS") No. 142,
Goodwill and Other Intangible Assets, as of January 1, 2002. As a result, we no
longer amortize goodwill and indefinite-lived intangible assets but continue to
amortize other acquisition-related intangibles. We have completed the
transitional goodwill impairment test and determined that no impairment exists.
We will perform a similar review of goodwill valuation annually, or earlier if
indicators of potential impairment exist. If for any reason the fair value of
our goodwill or that of any of our reporting units declines below the carrying
value in the future, we may incur charges for impairment of goodwill.

Income Taxes

We provide for income taxes in accordance with SFAS No. 109, Accounting for
Income Taxes. This standard takes into account the differences between financial
statement treatment and tax treatment of certain transactions. Deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. Our deferred tax calculation requires us to make
certain estimates about our future operations. Changes in state, federal and
foreign tax laws, as well as changes in our financial condition, could affect
these estimates. The effect of a change in tax rates is recognized as income or
expense in the period that includes the enactment date; however, the income tax
provision for the three and six months ended June 30, 2002 does not reflect any
tax benefits from the reorganization. Had all necessary steps to effect the
reorganization for U.S. federal corporate income tax purposes been completed
prior to June 30, 2002, the benefits from the reorganization would have been
reflected in the tax rate for the periods presented. On July 11, 2002,
legislation was proposed by the Chairman of the Committee of

17

Ways and Means of the House of Representatives that, if enacted, would deny
U.S. federal income tax benefits of the reorganization. Similar legislation has
been proposed by the Senate Finance Committee.

Valuation Allowance for Deferred Tax Assets

We record a valuation allowance to reduce our deferred tax assets when it
is more likely than not that some portion or all of the deferred tax assets will
expire before realization of the benefit or that future deductibility is not
probable. The ultimate realization of the deferred tax assets depends on the
ability to generate sufficient taxable income of the appropriate character in
the future.

Revenue Recognition

Revenues from product sales are recognized when all of the following
criteria have been met: a) evidence of an agreement exists, b) delivery to and
acceptance by the customer has occurred, c) the price to the customer is fixed
and determinable and d) collectibility is reasonably assured. Revenues from
rental and service agreements are recognized as earned, over the rental period
and when services have been rendered. The associated costs and expenses are
recognized as incurred.

18

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2002 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
2001

The following charts contain selected financial data comparing our results
for the three months ended June 30, 2002 and June 30, 2001:

COMPARATIVE FINANCIAL DATA

(a) Includes $4.5 million of transaction costs related to our reincorporation.
The net after tax impact of these charges was $3.0 million.

(b) EBITDA is calculated by taking operating income and adding back
depreciation and amortization. We have included an EBITDA calculation
because when we look at the performance of our businesses, we give
consideration to their EBITDA. Calculations of EBITDA should not be viewed
as a substitute to calculations under accounting principles generally
accepted in the United States, in particular cash flows from operations,
operating income and net income. In addition, EBITDA calculations by one
company may not be comparable to those of another company.

SALES BY GEOGRAPHIC REGION

19

A discussion of our results for the three months ended June 30, 2002 as
compared to the three months ended June 30, 2001 follows:

o Second quarter 2002 consolidated revenues improved 3.6%, or decreased 9.4%
excluding the impact of incremental revenues from our 2001 acquisitions,
over the second quarter 2001. Revenues in the Eastern Hemisphere improved
42.8%, or 29.9% excluding these acquisitions, with only an increase of 7.7%
in the quarterly average rig count. The improvements in the Eastern
Hemisphere are primarily attributable to the strong performance in the
Middle East and North Africa region. North American revenues declined
14.8%, or 28.7% excluding the impact of incremental revenues from our 2001
acquisitions, compared to a quarterly average rig count reduction of 36.3%.
Latin American revenues declined 21.6%, or 24.9% excluding these
acquisitions, which is comparable to this region's quarterly average rig
count decline of 23.5%. Revenues from our technology products, including
underbalanced services, expandables, intelligent well and Drilling with
Casing increased $13.8 million.

o Our gross profit as a percentage of revenues decreased from 37.6% in the
second quarter of 2001 to 33.1% in the second quarter of 2002. Our lower
margins reflect a shift in product and geographic mix, as well as pricing
pressures and lower volumes in a depressed U.S. market.

o Research and development expenses increased 54.2% reflecting our commitment
to investing in the development of new technologies for our industry.

o Selling, general and administrative expenses attributable to segments
decreased as a percentage of revenues from 15.8% in the second quarter of
2001 to 15.1% in the second quarter of 2002. This decline is primarily
attributable to the non-amortization of goodwill in 2002, partially offset
by an increase in the amortization of other intangibles and higher selling
costs attributable to the incremental revenues in the Eastern Hemisphere in
2002. Goodwill amortization attributable to segments for the second quarter
of 2001 was $8.2 million.

o Equity in earnings in unconsolidated affiliates increased $1.3 million in
the second quarter of 2002 compared to the same period last year. The
increase is primarily attributable to the non-amortization of goodwill
related to our equity investment in Universal.

o Interest expense, net for the three months ended June 30, 2002 increased
$2.3 million from the same period of 2001 primarily due to the interest
associated with our $350 million 6 5/8% senior notes issued in late 2001.
The interest related to this new debt was partially offset by benefits we
received on the interest rate swaps on our $200 million 7 1/4% senior notes
and lower interest rates on our short-term borrowings.

o Our effective tax rate for the second quarter of 2002 was 34.0% as compared
to 37.0% for the second quarter of 2001. The difference primarily reflects
the impact of the non-amortization of goodwill on earnings before tax in
2002.

SEGMENT RESULTS

DRILLING AND INTERVENTION SERVICES

Our Drilling and Intervention Services Division's revenues in the second
quarter of 2002 declined 8.5%, or 10.9% excluding the impact of incremental
revenues from our 2001 acquisitions, compared to the same quarter of 2001.
This decline is primarily due to pricing pressures and lower volumes in the U.S.
markets. Our Drilling and Intervention Services Division was also more severely
impacted in 2002 than in 2001 by the spring break-up in Canada where revenues
declined 22.2%, or 35.1% excluding the impact of our late 2001 acquisitions. The
impact of the decline in the North American markets was partly mitigated by our
strong performance in the Eastern Hemisphere.

The following chart sets forth data regarding the results of our Drilling
and Intervention Services Division for the second quarters of 2002 and 2001:

20

A discussion of the results of our Drilling and Intervention Services
Division for the second quarter of 2002 compared to the second quarter of 2001
follows:

o Our North American revenues for the second quarter of 2002 declined 28.7%,
or 30.5% excluding the incremental revenue from our 2001 acquisitions,
over the comparable period of 2001. Pricing pressures and a 36.3% decrease
in the quarterly average North American rig count contributed to this
downturn.

o Our international revenues excluding Canada increased 13.8%, or 10.8%
excluding incremental revenues from our 2001 acquisitions, from the second
quarter of 2001 despite a decline in Latin American revenues of
approximately 33%. Revenues in the Eastern Hemisphere improved 28.0%, or
24.1% excluding the impact of these acquisitions. The Eastern Hemisphere
benefited from a $9.1 million increase in sales of underbalanced services
as well as a 7.7% improvement in this region's quarterly average rig count.

o Gross profit as a percentage of revenues decreased 700 basis points from
the second quarter of 2001 to the second quarter of 2002. The lower margin
primarily reflects the impact of a shift in product mix as well as higher
repair and maintenance expenses incurred as we took advantage of lower
activity in North America.

o Selling, general and administrative expenses decreased as a percentage of
revenues from 11.5% in the second quarter of 2001 to 11.1% in the second
quarter of 2002. The decrease primarily reflects the non-amortization of
goodwill in 2002 partially offset by a decline in our revenue base.
Goodwill amortization for the second quarter of 2001 was $3.8 million.

COMPLETION SYSTEMS

Our Completion Systems Division reported its strongest quarterly revenues
since its creation in 1999. This division's revenues in the second quarter of
2002 were up 20.7%, or 8.5% excluding the impact of incremental revenues from
our 2001 acquisitions, from the same quarter of 2001. Revenues for the three
months ended June 30, 2002 benefited from acquisitions of more than $10 million
and from increased sales of technology-related products of $5.9 million.

The following chart sets forth data regarding the results of our Completion
Systems Division for the second quarters of 2002 and 2001:

A discussion of the results of our Completion Systems Division for the
second quarter of 2002 compared to the second quarter of 2001 follows:

o Our international revenues increased 36.1%, or 25.9% excluding the impact
of incremental revenues from our 2001 acquisitions. Geographically, the
Middle East and North Africa region showed the strongest organic growth
with revenues more than doubling. Revenues in North America decreased less
than 1%, or 15.9% excluding the impact of these acquisitions, in the second
quarter of 2002 compared to the same period last year primarily due to the
quarterly average rig count decline of 36.3%.

o Research and development expenses more than doubled in the second quarter
of 2002 compared to the second quarter of 2001. This division continues to
focus on the development of technology-related products including its
expandables and optical sensing systems. The optical sensing systems
product was acquired in November 2001, and this division is committed to
the further development of this product.

o Selling, general and administrative expenses as a percentage of revenues
decreased from 19.3% in the second quarter of 2001 to 16.9% in the same
period of 2002. The decrease is primarily due to the non-amortization of
goodwill, which was $2.1 million in the second quarter of 2001.

21

ARTIFICIAL LIFT SYSTEMS

Our Artificial Lift Systems Division's revenues increased 21.5% in the
second quarter of 2002 as compared to the second quarter of 2001, but remained
relatively flat after excluding the impact of incremental revenues from our 2001
acquisitions. These acquisitions, primarily the non-oil and gas operations of
Johnson Screens, contributed more than $32 million to this division in the
second quarter of 2002. The decline in our North American operations was
somewhat mitigated by gains experienced in Canada, despite a lower quarterly
average oil rig count in that region.

The following chart sets forth data regarding the results of our Artificial
Lift Systems Division for the second quarters of 2002 and 2001:

A discussion of the results of our Artificial Lift Systems Division as
reflected above for the second quarter of 2002 compared to the second quarter of
2001 follows:

o North American revenues increased 4.8%, or decreased 13.5% excluding
incremental revenues from our 2001 acquisitions, which contributed more
than $18 million to the top line. The decline was primarily related to
lower activity in the North American market where the North American oil
rig count declined approximately 40%. Revenues from our international
operations increased 57.5%, or 28.5% excluding the impact of these
acquisitions. The growth primarily occurred in the Middle East and North
Africa region as well as in the Asia Pacific region.

o Gross profit as a percentage of revenues decreased from 38.1% in the second
quarter of 2001 to 35.4% in the same quarter this year primarily due to a
change in the product mix.

o Selling, general and administrative expenses decreased as a percentage of
revenues from 23.6% for the three months ended June 30, 2001 to 20.9% for
the same period this year. The decrease is related to higher revenues and
the non-amortization of goodwill. Goodwill amortization for the second
quarter of 2001 was $2.3 million.

22

SIX MONTHS ENDED JUNE 30, 2002 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2001

The following charts contain selected financial data comparing our results
for the six months ended June 30, 2002 and June 30, 2001:

COMPARATIVE FINANCIAL DATA

SALES BY GEOGRAPHIC REGION

A discussion of our consolidated results for the six months ended June 30,
2002 compared to the six months ended June 30, 2001 follows:

o Consolidated revenues for the first six months of 2002, excluding our
historical compression results and our incremental revenues from 2001
acquisitions, declined slightly over the same period of 2001. On the same
basis, revenues in North America decreased more than $120 million, while
international revenues increased more than $100 million.

o Gross profit as a percentage of revenues decreased from 36.3% for the first
half of 2001 to 33.5% in the first half of 2002. The decline is primarily
attributable to pricing pressures and lower volumes in a depressed U.S.
market and a shift in our product mix.

o Research and development expenses increased 59.6% primarily due to costs
incurred to develop our technology-related product lines.

o Selling, general and administrative expenses attributable to segments
decreased as a percentage of revenues from 15.9% for the first half of 2001
to 14.8% in the same period this year. The decline is primarily related to
the non-amortization of goodwill in 2002. Goodwill amortization
attributable to the segments for the six months ended June 30, 2001 was
$16.7 million.

o Our equity in earnings in unconsolidated affiliates for the first six
months of 2002 was $5.4 million higher than the comparable period last
year. The increase is primarily related to the full period of equity income
related to our investment in Universal acquired in February 2001 and the
non-amortization of goodwill related to this investment.

23

o Interest expense, net for the six months ended June 30, 2002 increased $8.9
million from the same period last year primarily due to the interest
associated with our $350 million 6 5/8% senior notes issued in November
2001, partially offset by the benefit associated with our interest rate
swaps on our $200 million 7 1/4% senior notes.

o Our effective tax rate for the six months ended June 30, 2002 was 34.0%,
compared to 36.6% for the same period of 2001, primarily due to the impact
of non-amortization of goodwill on earnings before tax in 2002.

SEGMENT RESULTS

DRILLING AND INTERVENTION SERVICES

The following chart sets forth data regarding the results of our Drilling
and Intervention Services Division for the six months ended June 30, 2002 and
2001:

A discussion of the results of our Drilling and Intervention Services
Division for the six months ended June 30, 2002 compared to the six months ended
June 30, 2001 follows:

o Our North American revenues for the first six months of 2002 declined by
23.3%, or 25.5% excluding the incremental revenues from our 2001
acquisitions. A decrease in the six-month average North American rig count
of 31.9% contributed to the decline in revenues in this region. Our
international revenues increased 29.4%, or 22.0% excluding incremental
revenue from our 2001 acquisitions, compared to a relatively flat
international rig count.

o Gross profit as a percentage of revenues declined 14.7% in the first half
of 2002 from the same period last year. The decline in margins primarily
reflects the impact of the pricing pressures and lower volumes felt in the
U.S. market, as well as a change in product mix.

o Selling, general and administrative expenses as a percentage of revenues
declined from 11.5% in the first six months of 2001 to 11.0% in the first
six months of 2002. The decline is primarily related to the
non-amortization of goodwill partially offset by costs associated with the
expansion of our underbalanced services infrastructure. Goodwill
amortization for this period in 2001 was $6.4 million.

24

COMPLETION SYSTEMS

The following chart sets forth data regarding the results of our Completion
Systems Division for the six months ended June 30, 2002 and 2001:

A discussion of the results of our Completion Systems Division for the six
months ended June 30, 2002 compared to the six months ended June 30, 2001
follows:

o Our North American revenues increased 2.1%, or decreased 16.0% excluding
incremental revenues associated with our 2001 non-technology acquisitions.
Our international revenues increased 38.9%, or 24.9% excluding incremental
revenues from these acquisitions. Our 2001 non-technology acquisitions
contributed more than $25 million in incremental revenues in the first half
of 2002.

o Research and development expenses increased 111.9% in the first six months
of 2002 compared to the same period of 2001. This increase primarily
relates to this division's focus on the development of new
technology-related product lines, specifically expandables and optical
sensing.

o Selling, general and administrative expenses decreased as a percentage of
revenues from 20.6% in the first half of 2001 to 17.1% in the same period
this year primarily due to the non-amortization of goodwill in 2002.
Goodwill amortization for this period of 2001 was $4.9 million.

ARTIFICIAL LIFT SYSTEMS

The following chart sets forth data regarding the results of our Artificial
Lift Systems Division for the six months ended June 30, 2002 and 2001.

A discussion of the results of our Artificial Lift Systems Division as
reflected above for the six months ended June 30, 2002 compared to the six
months ended June 30, 2001 follows:

o North American revenues increased 5.6%, or decreased 10.8% excluding
incremental revenues from our 2001 acquisitions. International revenues
increased 46.4%, or 19.6% excluding these acquisitions. Our 2001
acquisitions contributed more than $56 million of incremental revenues in
the first six months of 2002.

o Gross profit as a percentage of revenues decreased from 36.0% in the first
half of 2001 to 34.8% in the same period this year. This decline was
primarily related to a change in product mix.

25

o Selling, general and administrative expenses decreased as a percentage of
revenue from 22.9% in the first six months of 2001 to 20.4% in the
comparable period in 2002. The decrease was primarily attributable to
increased revenues and the non-amortization of goodwill. Goodwill
amortization for the first half of 2001 was $4.6 million.

COMPRESSION SERVICES

On February 9, 2001, we completed the merger of essentially all of our
Compression Services Division into a subsidiary of Universal in exchange for
13.75 million shares of Universal common stock, which approximated 48% of
Universal's then outstanding shares. Subsequent to the merger, Universal issued
additional shares of common stock and our ownership declined to 45%. During
2001, up to the merger date, the Compression Services Division contributed $26.9
million of revenues, $3.6 million of EBITDA and an operating loss of $0.6
million to our consolidated results.

Subsequent to the merger date we began recording equity in earnings of
unconsolidated affiliates based on our portion of Universal's net income. The
compression businesses that were not included in the merger have been combined
with our Artificial Lift Systems Division.

CORPORATE REORGANIZATION

On June 26, 2002 the stockholders and the 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. Upon consummation of the merger, the
shares of Weatherford International, Inc. automatically converted into the right
to receive common shares of Weatherford International Ltd. All of the steps
necessary to effect the reorganization for U.S. federal corporate income tax
purposes were not complete as of June 30, 2002; therefore, the income tax
provision for the three and six month periods ended June 30, 2002 does not
reflect any tax benefits from the reorganization. Had all steps been completed
prior to June 30, 2002, the benefits would have been reflected in the tax rate
for the periods presented. On July 11, 2002, legislation was proposed by the
Chairman of the Committee of Ways and Means of the House of Representatives
that, if enacted, would deny U.S. federal income tax benefits of the
reorganization. Similar legislation has been proposed by the Senate Finance
Committee.

LIQUIDITY AND CAPITAL RESOURCES

Our current sources of capital are current reserves of cash, cash generated
from operations, proceeds from our asset securitization and borrowings under
bank lines of credit. We are currently reviewing acquisitions in our markets.
Depending on the size and timing of an acquisition, we could require additional
capital in the form of either debt, equity or both.

In conjunction with the merger, Weatherford International Ltd. fully and
unconditionally guaranteed the following obligations of Weatherford
International, Inc.: (1) the three-year multi-currency revolving credit
facility, (2) the five-year unsecured credit agreement, (3) the 7 1/4% Senior
Notes, (4) the 6 5/8% Senior Notes, (5) the Zero Coupon Debentures and (6) the
Convertible Preferred Debentures. In addition, we and Weatherford International,
Inc. fully and unconditionally guaranteed certain domestic subsidiaries'
performance obligations relating to the asset securitization, including their
payment obligations.

CASH FLOWS

As of June 30, 2002, our cash and cash equivalents were $48.4 million, a
net decrease of $40.4 million from December 31, 2001, which was primarily
attributable to the following:

o Cash inflows from operating activities of $77.5 million;

o Capital expenditures for property, plant and equipment of $124.8 million;

o Acquisition of the Shell license for $65.0 million;

o Acquisition of new businesses of approximately $18.1 million in cash, net
of cash acquired;

o Proceeds from the sales of assets of $19.9 million;

o Borrowings, net of repayments, on long-term debt and short-term facilities
of $99.0 million;

o Repayment on our asset securitization of $50.1 million; and

o Proceeds from stock option activity of $23.9 million.

26

SOURCE OF LIQUIDITY

Our operating cash flow is directly related to our business and the
segments in which we operate. Should market conditions deteriorate, or should we
experience unforeseen declines in results of operations, cash flows may be
reduced.

We anticipate that we will rely primarily upon existing cash balances and
cash flows from operating activities to maintain liquidity and fulfill
obligations of our current operations. We may also use lines of credit to
maintain liquidity for short term needs.

Banking Facilities

In April 2001, Weatherford International, Inc. entered into a $250.0
million, three-year multi-currency revolving credit facility, with commitment
capacity of up to $400.0 million. As of June 30, 2002, $186.0 million was
available under this credit facility.

Weatherford International, Inc. has a five-year unsecured revolving credit
facility, dated May 1998, that allows borrowing of up to $250.0 million at any
time. The facility consists of a $200.0 million U.S. credit facility and a $50.0
million Canadian credit facility. As of June 30, 2002, $65.7 million was
available under this facility due to amounts outstanding and $34.3 million,
which was used to secure outstanding letters of credit.

These credit facilities contain customary affirmative and negative
covenants, including a maximum debt to capitalization ratio, a minimum interest
coverage ratio, a limitation on liens, a limitation on incurrence of
indebtedness and a limitation on asset dispositions. The covenants apply to
Weatherford International Ltd., the guarantor of these obligations. We are in
compliance with all covenants set forth in the credit facilities. The committed
revolving credit facilities do not contain any provision, which makes their
availability dependent upon our credit ratings; however, the interest rates are
dependent upon the credit rating of our long-term senior debt.

We also have unsecured short-term borrowings with various institutions
pursuant to uncommitted facilities and bid note arrangements. At June 30, 2002,
we had $54.2 million in unsecured short-term borrowings outstanding under these
arrangements with interest rates ranging from 1.09% to 8.25%.

Asset Securitization

In July 2001, Weatherford International, Inc. entered into a one-year
agreement with a financial institution to sell, on a continuous basis, an
undivided interest in a specific pool of our domestic accounts receivable. The
one-year term was extended through August 2002 and Weatherford International,
Inc. is currently in the process of renewing this agreement. Weatherford
International, Inc. is permitted to securitize up to $150.0 million under this
agreement. If our or Weatherford International, Inc.'s credit rating falls below
BBB- from Standard and Poor's or Baa3 from Moody's, the financial institution
has no further obligation to purchase the accounts receivables. In connection
with the reorganization, we and Weatherford International, Inc. fully and
unconditionally guaranteed certain domestic subsidiaries performance obligations
relating to the asset securitization including their payment obligations.
Weatherford International, Inc. currently pays a program fee on participating
interests at a variable rate based on the financial institution's commercial
paper rate plus other fees. Program fees totaled $0.6 million and $1.3 million
for the three and six months ended June 30, 2002, respectively. Weatherford
International, Inc. had received $90.7 million for purchased interests as of
June 30, 3002.

CONTRACTUAL OBLIGATIONS

Our contractual obligations at June 30, 2002, and the effect such
obligations are expected to have on our liquidity and cash flow in future
periods have not changed materially, other than as detailed below, since
December 31, 2001.

Derivative Instruments

As of June 30, 2002, we had in effect two interest rate swap agreements to
manage the exposure on our $200.0 million 7 1/4% Senior Notes. The objective of
the swaps is to protect the debt against changes in fair value and to take
advantage of the interest rates available in the current economic environment.
Under these agreements, on May 15 and November 15 of each year until maturity,
we will receive interest at the fixed rate of 7 1/4% and will pay a floating
rate based on 6-month LIBOR. The interest rate differential to be received or
paid on the swaps is recognized over the life of the swaps as an adjustment to
interest expense. As of June 30, 2002, the aggregate fair market value of the
swap agreements was a $2.9 million net asset.

27

Capital Expenditures

Our capital expenditures for property, plant and equipment during the six
months ended June 30, 2002 were $124.8 million and primarily related to our new
technologies, drilling equipment, fishing tools and tubular service equipment.
Capital expenditures for 2002 are expected to be approximately $250.0 million.
Our depreciation expense during the three and six months ended June 30, 2002 was
$49.3 million and $97.0 million, respectively.

Shell License

On March 1, 2002, we obtained a worldwide license to Shell Technology
Ventures' expandable technology. Expandable technology refers to both slotted
and solid expandables, related tools and accessories and specialized expansion
systems. Under the terms of the agreement, we received a global license to
Shell's expandable tubular intellectual property, existing and future, and
immediate access to the U.S. market for use of our Completion System Division's
Expandable Sand Screen (ESS(TM)) system for consideration that includes $65.0
million in cash, a $20.0 million promissory note and $60.0 million of warrants
to purchase our common shares. In addition, we received a 50% reduction in the
royalty rate we historically paid for Shell licensed-technology sales. The
license will be amortized over the life of the agreement, which is 17 years.

Zero Coupon Convertible Senior Debentures

On June 30, 2000, Weatherford International, Inc. completed the private
placement of $910 million face amount of Zero Coupon Debentures. These
Debentures were issued at $501.6 million providing the holders with an annual 3%
yield to maturity. As of June 30, 2002, the amount recorded on our balance sheet
was $532.4 million, net of original issue discount.

Holders may convert the Zero Coupon Debentures into our common shares at
any time before maturity at a conversion rate of 9.9970 shares per $1,000
principal amount at maturity or an initial conversion price of $55.1425 per
share. The effective conversion price will increase as the accreted value of the
Zero Coupon Debentures increases. We may redeem the Zero Coupon Debentures on or
after June 30, 2005 at the accreted discounted amount at the time of redemption
as provided for in the indenture agreement. The holders also may require us to
repurchase the Zero Coupon Debentures on June 30, 2005, June 30, 2010, and June
30, 2015 at the accreted discounted amount at the time of redemption. We may, at
our election, repurchase the debentures in cash, common shares or a combination
thereof.

EXPOSURES

INDUSTRY EXPOSURE

The concentration of our customers in the energy industry may impact our
overall exposure to credit risk, either positively or negatively, in that
customers may be similarly affected by prolonged changes in economic and
industry conditions. We perform ongoing credit evaluations of our customers and
do not generally require collateral in support of our trade receivables. We
maintain reserves for potential credit losses and, generally, actual historical
losses have been consistent with our expectations.

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 that any of the items of litigation that we are currently subject to
will result in any material uninsured losses to us. However, it is possible that
an unexpected judgment could be rendered against us in cases in which we could
be uninsured and beyond the amounts that 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 which 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

28

businesses or a business or property that one of our predecessors owned or used
could arise that could involve the expenditure of a material amount of funds.

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 long-term
effects of the September 11, 2001 attacks on our businesses are unknown. 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, which could adversely affect our
businesses for the short- or long-term in ways that cannot presently be
predicted.

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 inherently subject to risks of war, political
disruption, civil disturbance and changes in global trade policies that may:

o disrupt oil and gas exploration and production activities;

o negatively impact results of operations;

o restrict the movement of funds;

o inhibit our ability to collect receivables;

o lead to U.S. government or international sanctions; and

o limit access to markets for periods of time.

CURRENCY EXPOSURE

A single European currency ("the Euro") was introduced on January 1, 1999,
at which time the conversion rates between legacy currencies and the Euro were
set for 11 participating member countries. However, the legacy currencies in
those countries continued to be used as legal tender through January 1, 2002.
Thereafter, the legacy currencies were canceled, and the Euro bills and coins
are now used. The transition to the Euro did not have a significant impact on
our condensed consolidated financial statements or our business operations.

Approximately 27.9% 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 loss in the shareholders' equity
section on our Condensed Consolidated Balance Sheets. We recorded a $11.3
million adjustment to our equity account for the six months ended June 30, 2002
primarily to reflect the net impact of the decline in the Argentinean Peso and
Brazilian Real against the U.S. Dollar and the strengthening of the Canadian
Dollar, Norwegian Kroner and British Pound against the U.S. Dollar. Changes in
currencies also result in the recognition of remeasurement and transactional
gains and losses in our Condensed Consolidated Statements of Income.

FORWARD-LOOKING STATEMENTS

This report as well as other filings made by us and Weatherford
International, Inc. with the Securities and Exchange Commission and our releases
issued to the public contain various statements relating to our future results,
including certain projections and business trends. We believe these statements
constitute "Forward-Looking Statements" as defined in the Private Securities
Litigation Reform Act of 1995.

Certain of the risks and uncertainties may cause actual results to be
materially different from projected results contained in forward-looking
statements in this report and in our other disclosures. These risks and
uncertainties include, but are not limited to, the following:

A downturn in market conditions could affect projected results. Any
material changes in oil and gas supply and demand balance, oil and gas
prices, rig count or other market trends would affect our results and would
likely affect the forward-looking information provided by us. The oil and
gas industry is extremely volatile and subject to change based on political
and economic factors outside our control. Through the beginning of 2002,
there was a general decrease in prices for oil and natural gas, reflecting
diminished demand attributable to political and economic issues. In the
last few months, there has been a modest increase and stabilization of

29

prices for oil and natural gas. In addition, the United States economy and
most foreign economies appear to have stabilized in the last few months
despite their weakening in the prior periods. If an extended regional
and/or worldwide recession would occur, it would result in even lower
demand and lower prices for oil and gas, which would adversely affect our
revenues and income. At this time, we have assumed that any material
declines during 2002 will be limited to North and Latin America.
Furthermore, our forward-looking statements regarding our drilling and
completion products and services assume a modest improvement in the
international rig count during 2002 and that no extended material declines
in the North American rig count will occur.

Our results are dependent upon our ability to react to the current
market environment. During the fourth quarter of 2001 and 2002 to date, we
implemented a number of programs intended to reduce costs and align our
cost structure with the current market environment. Our forward-looking
statements assume these measures will generate the savings expected and, if
the markets continue to decline, that any additional actions we pursue will
be adequate to achieve the desired savings.

A material disruption in our manufacturing could adversely affect some
divisions of our business. Our forward-looking statements assume that any
manufacturing expansion and consolidation will be completed without any
material disruptions. If there are any disruptions or excess costs
associated with manufacturing changes, our results could be adversely
affected.

Our success is dependent upon the integration of acquisitions. During
2001, we consummated acquisitions of several product lines and businesses,
including the acquisition of Johnson Screens. The success of our
acquisitions will be dependent on our ability to integrate the product
lines and businesses with our existing businesses and eliminate duplicative
costs. We incur various duplicative costs during the integration of the
operations of acquired businesses into our operations. Our forward-looking
statements assume the successful integration of the operations of the
acquired businesses and their contribution to our results during 2002;
however, there can be no assurance that the expected benefits of these
acquisitions will materialize. Integration of acquisitions is something
that cannot occur in the short-term and that requires constant effort at
the local level to be successful. Accordingly, there can be no assurance as
to the ultimate success of these integration efforts.

Our long-term growth strategy is dependent upon technological advances.
Our ability to succeed with our long-term growth strategy is dependent in
part on the technological competitiveness of our products and services. A
central aspect of our growth strategy is to enhance the technology of our
current products and services, to obtain new technologically-advanced
value-added products through internal research and development and/or
acquisitions and to then expand the markets for the technology through the
leverage of our worldwide infrastructure. These technological advances
include, but are not limited to, our underbalanced drilling technology,
expandable technology, production optimization and fiber optic sensor
technology. Our forward-looking statements have assumed above average
growth from these new products and services.

Unanticipated changes in tax laws related to corporate reorganization
could have an adverse effect on our corporate reorganization. Any change 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
authorities would likely affect our corporate reorganization. The U.S.
Congress introduced legislation with retroactive effects, which could
substantially reduce or eliminate the tax benefits resulting from the
reorganization.

Unanticipated costs or nonrealization of expected benefits from our
corporate reorganization could affect our projected results. An inability
to realize expected benefits of the reorganization within the anticipated
time frame, or at all, would likely affect the anticipated impact of our
corporate reorganization. Similarly, any cost or difficulty related to the
reorganization and related transactions, which could be greater than
expected or thought, would also affect our corporate reorganization.

A decline in the fair value of our investment in Universal that is
other than temporary would adversely affect our projected results. The
current market value of our investment in Universal is at a historical low.
If Universal's stock price remains depressed, and it is determined that the
decline in value is other than temporary, we would be required to record a
write-down in the carrying value of our asset. In connection with the
reduction in the carrying value, we would be required to recognize a tax
benefit related to the deferred tax liability recorded when the initial
transaction was consummated. We have assumed that the decline in value of
our investment in Universal is temporary.

30

Currency fluctuations could have a material adverse financial impact. A
material decline in currency rates in our markets could affect our future
results as well as affect the carrying values of our assets. World
currencies have been subject to much volatility. Our forward-looking
statements assume no material impact from future changes in currencies.

Political disturbances, war, terrorist attacks and changes in global
trade policies could adversely impact our operations. We have assumed that
there will be no material political disturbances, war, or terrorist attacks
and that there will be no material changes in global trade policies.

Unexpected litigation and legal disputes could have a material adverse
financial impact. If we experience unexpected litigation or unexpected
results in our existing litigation that have a material effect on our
financial results, the accuracy of the forward-looking statements would be
affected. Our forward-looking statements assume that there will be no such
unexpected litigation or results.

Finally, our future results will depend upon various other risks and
uncertainties, including, but not limited to, those detailed in our and
Weatherford International, Inc.'s other filings with the SEC. For additional
information regarding risks and uncertainties, see our and Weatherford
International, Inc.'s other current year filings with the SEC under the
Securities Exchange Act of 1934, as amended, and the Securities Act of 1933, as
amended, available free of charge at the SEC's website at www.sec.gov.

31

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

We are currently exposed to market risk from changes in foreign currency
rates, changes in interest rates and changes in equity prices. A discussion of
our market risk exposure in financial instruments follows.

FOREIGN CURRENCY EXCHANGE RATES

Because we operate in virtually every oil and gas exploration and
production region in the world, we conduct a portion of our business in
currencies other than the U.S. Dollar. The functional currency for most of our
international operations is the applicable local currency. Although most of our
international revenues are denominated in the local currency, the effects of
foreign currency fluctuations are largely mitigated because local expenses of
such foreign operations are also generally denominated in the same currency.

Assets and liabilities of foreign subsidiaries in which the functional
currency is the local currency are translated using the exchange rates in effect
at the balance sheet date, resulting in translation adjustments that are
reflected as accumulated other comprehensive loss in the shareholders' equity
section on our Condensed Consolidated Balance Sheets. Approximately 27.9% of our
net assets are impacted by changes in foreign currencies in relation to the U.S.
Dollar. We recorded a $11.3 million adjustment to our equity account for the six
months ended June 30, 2002 to reflect the impact of the decline in the
Argentinean Peso and Brazilian Real against the U.S. Dollar, partially offset by
a strengthening of the Canadian Dollar, Norwegian Kroner and British Pound
against the U.S. Dollar.

INTEREST RATES

We are subject to interest rate risk on our long-term fixed interest rate
debt and, to a lesser extent, variable-interest rate borrowings. Our long-term
borrowings subject to interest rate risk primarily consist of the $350.0 million
principal of the 6 5/8% Senior Notes due 2011, $200.0 million principal of the
7 1/4% Senior Notes due 2006, the $402.5 million principal of the 5% Convertible
Subordinated Preferred Equivalent Debentures due 2027 and the $910.0 million
Zero Coupon Senior Convertible Debentures due 2020. Changes in interest rates
would, assuming all other things being equal, cause the fair market value of
debt with a fixed interest rate to increase or decrease, and thus increase or
decrease the amount required to refinance the debt. As of June 30, 2002, the
fair market value of the 6 5/8% Senior Notes was $357.9 million. The fair value
of the 7 1/4% Senior Notes was $211.0 million as of June 30, 2002. The fair
value of both Senior Notes is principally dependent on changes in prevailing
interest rates. As of June 30, 2002, the fair market value of the Convertible
Preferred Debentures was $372.6 million, and the fair market value of the Zero
Coupon Debentures was $575.6 million. The fair market value of the Convertible
Preferred Debentures and the Zero Coupon Debentures is principally dependent on
both prevailing interest rates and our current share price as it relates to the
conversion price of $53.34 per share and $55.1425 per share, respectively.

As of June 30, 2002, we had two interest rate swaps, which convert fixed
rate debt to variable rate debt. Our interest rate swaps hedge the fixed rate
7 1/4% Senior Notes and are a net asset with an aggregate fair value of $2.9
million at June 30, 2002. Under the interest rate swap agreements, each counter
party pays a fixed rate of 7 1/4% interest and we pay a variable interest rate
based on published 6-month LIBOR. The payments under the agreements are settled
on May 15 and November 15 of each year until May 2006 and coincide with the
interest payment dates on the hedged debt instrument.

We have various other long-term debt instruments but believe that the
impact of changes in interest rates in the near term will not be material to
these instruments. Short-term borrowings of $288.2 million at June 30, 2002
approximate fair market value.

32

PART II. OTHER INFORMATION

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On June 26, 2002, Weatherford International, Inc. held two meetings, an
Annual Stockholders' Meeting and a Special Meeting of Stockholders. At
Weatherford International, Inc.'s Annual Meeting of Stockholders, the
stockholders approved the election of eight directors to serve until the next
annual meeting of Weatherford International Ltd.'s shareholders. There were no
broker non-votes. The following sets forth the results of the voting with
respect to such matter:

At Weatherford International, Inc.'s Special Meeting of Stockholders, the
stockholders approved the adoption of the Agreement and Plan of Merger dated May
8, 2002, whereby Weatherford International, Inc. became a subsidiary of
Weatherford International Ltd., a Bermuda company, and all of the stockholders
of Weatherford International, Inc. became shareholders of Weatherford
International Ltd., a newly formed Bermuda Company. The results were 91,133,457
shares voted for, 5,818,505 shares voted against (not including shares withheld)
and 927,666 shares abstained. There were 21,431,539 shares withheld votes that
counted against the merger.

ITEM 5. OTHER INFORMATION

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes--Oxley Act of 2002, the certifications of Bernard J. Duroc-Danner,
Chief Executive Officer of the Company, and Lisa W. Rodriguez, Chief Financial
Officer of the Company, are filed with this Form 10-Q as Exhibit Numbers 99.1
and 99.2. Copies of these certifications are available on the Company's website
at www.weatherford.com.

In addition, the sworn statements/certifications of Mr. Duroc-Danner and
Ms. Rodriguez, as required by Securities and Exchange Commission Order No. 4-460
and pursuant to Section 21(a)(1) of the Securities Exchange Act of 1934, were
filed with the Securities and Exchange Commission on August 9, 2002 as Exhibit
Numbers 99.1 and 99.2 to the Company's Form 8-K. Copies of these certifications
are also available on the Company's website at www.weatherford.com.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:

EXHIBIT
NUMBER DESCRIPTION
- ------ -----------

2.1 Agreement and Plan of Merger dated May 8, 2002, among Weatherford
International, Inc., Weatherford Merger, Inc., Weatherford
International Ltd. and Weatherford U.S. Holdings LLC (incorporated
by reference to Exhibit 2.1 to Amendment No. 1 to the Registration
Statement on Form S-4 (Reg. No. 333-85644) filed on May 22, 2002).

3.1 Memorandum of Association of Weatherford International Ltd.
(incorporated by reference to Annex II to the proxy
statement/prospectus included in Amendment No. 1 to the
Registration Statement on Form S-4 (Reg. No. 333-85644) filed on
May 22, 2002).

3.2 Memorandum of Increase of Share Capital of Weatherford
International Ltd. (incorporated by reference to Annex II to the
proxy statement/prospectus included in Amendment No. 1 to the
Registration Statement on Form S-4 (Reg. No. 333-85644) filed on
May 22, 2002).

3.3 Bye-laws of Weatherford International Ltd. (incorporated by
reference to Annex III to the proxy

33

statement/prospectus included in Amendment No. 1 to the
Registration Statement on Form S-4 (Reg. No. 333-85644) filed on
May 22, 2002).

4.1 See Exhibits 3.1, 3.2 and 3.3 for provisions of the Memorandum of
Association and Bye-laws of Weatherford International Ltd.
defining the rights of holders of common shares.

4.2 Amending Agreement dated June 26, 2002, by and among Weatherford
International, Inc., Weatherford International Ltd., Weatherford
Canada Ltd., Weatherford ER Acquireco Inc., Jamie E. Biluk,
N. Scott A. Biluk, A. Lynn Biluk and Tracy L. Biluk (incorporated
by reference to Exhibit 4.4 to Post-Effective Amendment No. 1 to
the Registration Statement on Form S-3 (Reg. No. 333-82634) filed
on July 5, 2002).

+4.3 Amendment No. 1 dated May 17, 2002, to Credit Agreement dated
April 26, 2001, among Weatherford International, Inc., Weatherford
Eurasia Limited, Weatherford Eurasia B.V., Weatherford
International Ltd., the Lenders defined therein and Bank One,
N.A., as Administrative Agent.

+4.4 Amendment No. 1 dated May 17, 2002, to Amended and Restated Credit
Agreement dated May 27, 1998, among Weatherford International,
Inc., Weatherford Canada Ltd., Weatherford International Ltd., the
Lenders defined therein, JPMorgan Chase Bank, as Administrative
Agent for the U.S. Lenders, and The Bank of Nova Scotia, as
Documentation Agent for the Lenders and as Agent for the Canadian
Lenders.

+4.5 Waiver and Omnibus Amendment dated June 26, 2002, to Sale
Agreement dated July 2, 2001, and Purchase Agreement dated July 2,
2001, among W1 Receivables, L.P., Weatherford International, Inc.,
Bank One, NA (Main Office Chicago), individually and as Agent,
Jupiter Securitization Corporation, Weatherford Artificial Lift
Systems, Inc., Weatherford U.S., L.P. and Weatherford
International Ltd.

+4.6 Waiver and Amendment No. 1 dated May 14, 2002, to Purchase
Agreement dated July 2, 2001, among W1 Receivables, L.P.,
Weatherford International, Inc., Bank One, NA (Main Office
Chicago), individually and as Agent, and Jupiter Securitization
Corporation.

+4.7 Fourth Supplemental Indenture dated June 26, 2002, among
Weatherford International, Inc., Weatherford International Ltd.
and The Bank of New York (as successor in interest to Bank of
Montreal Trust Company).

+4.8 Convertible Debenture Guarantee Agreement dated June 26, 2002,
between Weatherford International Ltd. and JP Morgan Chase Bank.

+4.9 Second Supplemental Indenture dated June 26, 2002, among
Weatherford International, Inc., Weatherford International Ltd.
and JP Morgan Chase Bank.

+10.1 Assumption and General Amendment of Directors' Stock Option and
Benefit Programs and General Amendment of Employee Stock Option
and Benefit Programs of Weatherford International, Inc. dated June
26, 2002.

+99.1 Certification of Chief Executive Officer.

+99.2 Certification of Chief Financial Officer.

- ----------

+ Filed herewith.

(b) Reports on Form 8-K:

Current Report on Form 8-K dated June 26, 2002, announcing the
corporate reorganization pursuant to which Weatherford International
Ltd. became the parent holding company of Weatherford International,
Inc. Additionally, the following reports were filed by Weatherford
International, Inc. during the quarter ended June 30, 2002:

(a) Current report on Form 8-K dated April 5, 2002, announcing the
approval of the Board of Directors of the corporate
reorganization.

(b) Current Report on Form 8-K dated April 23, 2002, announcing
earnings for the quarter ended March 31, 2002.

(c) Current report on Form 8-K dated June 26, 2002, announcing the
corporate reorganization.

34

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Weatherford International Ltd.

By: /s/ Bernard J. Duroc-Danner
---------------------------------------------
Bernard J. Duroc-Danner
Chief Executive Officer, Chairman of the
Board and Director
(Principal Executive Officer)

/s/ Lisa W. Rodriguez
---------------------------------------------
Lisa W. Rodriguez
Senior Vice President and Chief Financial
Officer
(Principal Financial and Accounting Officer)

Date: August 14, 2002

35

EXHIBIT INDEX

- ----------
+ Filed herewith.

36