UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

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

WEATHERFORD INTERNATIONAL LTD.

(Exact name of registrant as specified in its charter)

(Commission file number)

Switzerland		98-0606750
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
4-6 Rue Jean-François Bartholoni, 1204 Geneva, Switzerland (Address of principal executive offices)		Not Applicable (Zip 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 þ          No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes þ          No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o          No þ

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

As of October 27, 2009, there were 737,207,507 Weatherford registered shares, 1.16 Swiss francs par value per share, outstanding.

 

 

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)

		September 30,				December 31,
		2009				2008
		(unaudited)
ASSETS
Current Assets:
Cash and Cash Equivalents		$	306,595			$	238,398
Accounts Receivable, Net of Allowance for Uncollectible Accounts of $20,736 and $16,425, Respectively			2,386,843				2,442,848
Inventories			2,307,659				2,088,342
Current Deferred Tax Assets			259,811				270,252
Other Current Assets			835,340				530,442
Total Current Assets			6,096,248				5,570,282
Property, Plant and Equipment, Net of Accumulated Depreciation of $3,254,742 and $2,690,996, Respectively			6,887,382				5,922,172
Goodwill			4,159,206				3,530,915
Other Intangible Assets, Net of Accumulated Amortization of $335,852 and $268,857, Respectively			717,612				701,483
Equity Investments			540,902				515,770
Other Assets			283,940				235,891
Total Assets		$	18,685,290			$	16,476,513
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Short-term Borrowings and Current Portion of Long-term Debt		$	1,021,123			$	1,255,947
Accounts Payable			864,656				886,104
Other Current Liabilities			862,835				880,042
Total Current Liabilities			2,748,614				3,022,093
Long-term Debt			5,851,678				4,564,255
Other Liabilities			368,401				524,116
Total Liabilities			8,968,693				8,110,464
Shareholders’ Equity:
Shares, CHF 1.16 Par Value, Authorized 1,093,303 Shares, Conditionally Authorized 364,434 Shares, Issued 758,479 Shares at September 30, 2009, Common Shares, $1 Par Value, Authorized 1,000,000 Shares, Issued 728,689 Shares at December 31, 2008			761,109				728,689
Capital in Excess of Par Value			4,643,893				4,059,112
Treasury Shares, Net			(624,673	)			(759,477	)
Retained Earnings			4,808,242				4,524,085
Accumulated Other Comprehensive Income (Loss)			46,657				(266,761	)
Weatherford Shareholders’ Equity			9,635,228				8,285,648
Noncontrolling Interests			81,369				80,401
Total Shareholders’ Equity			9,716,597				8,366,049
Total Liabilities and Shareholders’ Equity		$	18,685,290			$	16,476,513

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

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In thousands, except per share amounts)

		Three Months								Nine Months
		Ended September 30,								Ended September 30,
		2009				2008				2009				2008
Revenues:
Products		$	636,378			$	953,084			$	2,029,831			$	2,616,710
Services			1,513,501				1,587,712				4,371,021				4,349,228
			2,149,879				2,540,796				6,400,852				6,965,938
Costs and Expenses
Cost of Products			526,960				685,338				1,621,196				1,905,964
Cost of Services			1,082,281				955,585				2,965,407				2,638,791
Research and Development			49,300				52,026				144,434				139,095
Selling, General and Administrative Attributable to Segments			287,453				268,710				892,822				778,375
Corporate General and Administrative			53,963				44,397				162,981				137,859
Gain on Sale of Subsidiary			—				—				—				(81,344	)
Operating Income			149,922				534,740				614,012				1,447,198
Other Expense:
Interest Expense, Net			(90,285	)			(60,521	)			(274,846	)			(175,723	)
Other, Net			(11,046	)			(8,243	)			(28,456	)			(13,026	)
Income from Continuing Operations Before Income Taxes			48,591				465,976				310,710				1,258,449
Benefit (Provision) for Income Taxes			34,369				(82,990	)			(3,535	)			(214,490	)
Income from Continuing Operations, Net of Taxes			82,960				382,986				307,175				1,043,959
Loss from Discontinued Operation, Net of Taxes			—				—				—				(12,928	)
Net Income			82,960			$	382,986				307,175				1,031,031
Net Income Attributable to Noncontrolling Interests			(5,586	)			(12,386	)			(23,018	)			(25,246	)
Net Income Attributable to Weatherford		$	77,374			$	370,600			$	284,157			$	1,005,785
Basic Earnings Per Share Attributable to Weatherford:
Income from Continuing Operations		$	0.11			$	0.54			$	0.40			$	1.49
Loss from Discontinued Operation			—				—				—				(0.01	)
Net Income		$	0.11			$	0.54			$	0.40			$	1.48
Diluted Earnings Per Share Attributable to Weatherford:
Income from Continuing Operations		$	0.11			$	0.53			$	0.40			$	1.46
Loss from Discontinued Operation			—				—				—				(0.02	)
Net Income		$	0.11			$	0.53			$	0.40			$	1.44
Amounts Attributable to Weatherford Registered Shareholders:
Income from Continuing Operations, Net of Taxes		$	77,374			$	370,600			$	284,157			$	1,018,713
Loss from Discontinued Operation, Net of Taxes			—				—				—				(12,928	)
Net Income		$	77,374			$	370,600			$	284,157			$	1,005,785
Weighted Average Shares Outstanding:
Basic			724,114				682,532				707,621				681,531
Diluted			735,109				701,284				715,719				700,099

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

WEATHERFORD INTERNATIONAL LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)

		Nine Months
		Ended September 30,
		2009				2008
Cash Flows from Operating Activities:
Net Income		$	307,175			$	1,031,031
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation and Amortization			652,996				528,129
Gain on Sales of Assets and Businesses, Net			(7,242	)			(111,043	)
Gain on Contingent Consideration			(27,368	)			—
Loss from Discontinued Operation			—				12,928
Employee Share-Based Compensation Expense			85,136				74,760
Excess Tax Benefits from Share-Based Compensation			(3,383	)			(15,746	)
Deferred Income Tax Benefit			(209,864	)			(14,940	)
Other, Net			(6,772	)			(17,619	)
Change in Operating Assets and Liabilities, Net of Effect of Businesses Acquired
Accounts Receivable			210,861				(402,682	)
Inventories			(122,252	)			(426,526	)
Accounts Payable			(95,918	)			147,046
Other			(503,667	)			(214,763	)
Net Cash Provided by Operating Activities – Continuing Operations			279,702				590,575
Net Cash Used by Operating Activities – Discontinued Operation			—				(6,219	)
Net Cash Provided by Operating Activities			279,702				584,356
Cash Flows from Investing Activities:
Acquisitions of Businesses, Net of Cash Acquired			(4,749	)			(673,845	)
Capital Expenditures for Property, Plant and Equipment			(1,269,884	)			(1,821,813	)
Acquisition of Intellectual Property			(25,352	)			(14,377	)
Purchase of Equity Investments in Unconsolidated Affiliates			(26,999	)			(3,422	)
Proceeds from Sale of Assets and Businesses, Net			113,720				290,974
Net Cash Used by Investing Activities – Continuing Operations			(1,213,264	)			(2,222,483	)
Net Cash Provided by Investing Activities – Discontinued Operation			—				11,000
Net Cash Used by Investing Activities			(1,213,264	)			(2,211,483	)
Cash Flows from Financing Activities:
Borrowings of (Repayments on) Short-term Debt, Net			(237,549	)			295,528
Borrowings of Long-term Debt, Net			1,230,262				1,482,844
Excess Tax Benefits from Share-Based Compensation			3,383				15,746
Other Financing Activities, Net			5,663				(1,159	)
Net Cash Provided by Financing Activities – Continuing Operations			1,001,759				1,792,959
Net Cash Provided by Financing Activities – Discontinued Operation			—				—
Net Cash Provided by Financing Activities			1,001,759				1,792,959
Net Increase in Cash and Cash Equivalents			68,197				165,832
Cash and Cash Equivalents at Beginning of Period			238,398				170,714
Cash and Cash Equivalents at End of Period		$	306,595			$	336,546
Supplemental Cash Flow Information:
Interest Paid		$	304,623			$	188,940
Income Taxes Paid, Net of Refunds			325,920				231,319

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

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

(In thousands)

		Three Months								Nine Months
		Ended September 30,								Ended September 30,
		2009				2008				2009				2008
Net Income		$	82,960			$	382,986			$	307,175			$	1,031,031
Other Comprehensive Income:
Deferred Loss on Derivative Instruments			—				—				—				(12,576	)
Amortization of Pension Components			1,936				885				6,464				6,501
Foreign Currency Translation Adjustment			146,155				(192,205	)			306,377				(154,879	)
Other			153				148				456				335
Comprehensive Income			231,204				191,814				620,472				870,412
Comprehensive Income Attributable to Noncontrolling Interests			(5,586	)			(12,386	)			(22,897	)			(25,246	)
Comprehensive Income Attributable to Weatherford		$	225,618			$	179,428			$	597,575			$	845,166

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

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

1. Basis of Presentation and New Accounting Standards

     The accompanying unaudited condensed consolidated financial statements of Weatherford International Ltd. and all majority-owned subsidiaries (the “Company”) 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 September 30, 2009, Condensed Consolidated Statements of Income, Condensed Consolidated Statements of Comprehensive Income and Condensed Consolidated Statements of Cash Flows for the three and nine months ended September 30, 2009 and 2008. Although the Company believes 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 United States (“U.S.”) generally accepted accounting principles have been condensed or omitted in this Form 10-Q pursuant to U.S. Securities and Exchange Commission (“SEC”) rules and regulations. These financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2008 and the related notes included in the Company’s Annual Report on Form 10-K. The results of operations for the three and nine months ended September 30, 2009 are not necessarily indicative of the results expected for the full year.

     The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates 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 and disclosure of contingent liabilities. On an ongoing basis, the Company evaluates its estimates, including those related to uncollectible accounts receivable, lower of cost or market of inventories, equity investments, intangible assets and goodwill, property, plant and equipment, income taxes, percentage-of-completion accounting for long-term contracts, self-insurance, pension and post retirement benefit plans and contingent liabilities. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

     In February 2009, Weatherford International Ltd., a Bermuda exempted company (“Weatherford Bermuda”), and Weatherford International Ltd., a Swiss joint stock corporation (“Weatherford Switzerland”), completed a share exchange transaction under the terms of a share exchange agreement, dated as of December 10, 2008, effected by way of a scheme of arrangement under Bermuda law, for purposes of changing the Company’s place of incorporation from Bermuda to Switzerland (collectively, the “Transaction”). Pursuant to the Transaction, each common share, par value U.S. $1.00 per share, of Weatherford Bermuda was exchanged for one registered share, par value 1.16 Swiss francs (“CHF”) per share, of Weatherford Switzerland. As a result of the Transaction, Weatherford Bermuda became a direct, wholly-owned subsidiary of Weatherford Switzerland.

     Effective July 1, 2009, the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) became the single official source of authoritative, nongovernmental generally accepted accounting principles (“GAAP”) in the U S. The historical GAAP hierarchy was eliminated and the ASC became the only level of authoritative GAAP, other than guidance issued by the SEC. The Company’s accounting policies were not affected by the conversion to ASC. However, references to specific accounting standards in the footnotes to the Company’s consolidated financial statements have been changed to refer to the appropriate section of ASC.

     Effective January 1, 2009, the Company adopted a new standard for the accounting and reporting of ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling interest, changes in a parent’s ownership interest and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. The statement also establishes reporting requirements that provide sufficient disclosures that clearly identify and distinguish between the interest of the parent and the interest of the noncontrolling owners. This standard changed the accounting for and reporting of minority interest (now called noncontrolling interest) in the consolidated financial statements. Upon adoption, certain prior period amounts have been reclassified to conform to the current period financial statement presentation.

     During the second quarter of 2009, the Company adopted ASC 855, Subsequent Events, which establishes general standards of accounting for and disclosures of events that occur after the balance sheet date but before the financial statements are issued or are available to be issued. It requires the disclosure of the date through which an

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

entity has evaluated subsequent events. The Company has evaluated subsequent events through October 30, 2009, the date of issuance of the condensed consolidated financial statements.

     In December 2008, the FASB issued additional guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan on investment policies and strategies, major categories of plan assets, inputs and valuation techniques used to measure the fair value of plan assets and significant concentrations of risk within plan assets. This guidance will be effective for fiscal years ending after December 15, 2009, with earlier application permitted. Upon initial application, the provisions of this guidance are not required for earlier periods that are presented for comparative purposes. The Company is currently evaluating the disclosure requirements of this guidance and anticipates that it will not have a significant impact on the reporting of its results of operations.

     In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R), (“SFAS No. 167”). As of September 30, 2009, SFAS No. 167 has not been incorporated within the FASB ASC. SFAS No. 167 amends previous accounting guidance to require an enterprise to qualitatively assess the determination of the primary beneficiary of a variable interest entity (“VIE”) based on whether the entity (1) has the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (2) has the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. Also, SFAS No. 167 requires an ongoing reconsideration of the primary beneficiary, and amends the events that trigger a reassessment of whether an entity is a VIE. Enhanced disclosures are also required to provide information about an enterprise’s involvement in a VIE. This statement will be effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. The Company is currently evaluating this new statement.

     Effective January 1, 2009, the Company prospectively adopted ASC guidance related to disclosures about derivative instruments and hedging activities and new ASC guidance related to fair value measurements required for the Company’s nonfinancial assets and nonfinancial liabilities. See Notes 8 and 9 for disclosures related to the adoption of these ASC updates.

2. Business Combinations

     Effective January 1, 2009, the Company adopted ASC 805, Business Combinations. This establishes principles and requirements for how a company recognizes assets acquired, liabilities assumed, contractual contingencies and contingent consideration measured at fair value at the acquisition date. The statement also establishes disclosure requirements which will enable users to evaluate the nature and financial effect of the business combination.

     The Company has acquired businesses important to its long-term growth strategy. Results of operations for acquisitions are included in the accompanying Condensed Consolidated Statements of Income from the date of acquisition. The balances included in the Condensed Consolidated Balance Sheets related to recent acquisitions are based on preliminary information and are subject to change when final asset valuations are obtained and the potential for liabilities has been evaluated. Acquisitions are accounted for using the purchase method of accounting and the purchase price is allocated to the net assets acquired based upon their estimated fair values at the date of acquisition.

     In July 2009, the Company completed its acquisition of the Oilfield Services Division of TNK-BP (“TNK-OFS”). In this transaction, the Company acquired ten oilfield services companies providing drilling, well workover and cementing services operating in West Siberia, East Siberia and the Volga-Urals region. The Company issued 24.3 million shares valued at approximately $450 million and expects to pay approximately $45 million in additional cash consideration related to working capital adjustments during the fourth quarter of 2009. In addition, if TNK-OFS sells its shares in the Company for a price less than $18.50 per share prior to June 29, 2010, the Company is obligated to pay TNK-OFS additional consideration in an amount equal to the difference between the price at which the shares were sold and $18.50. The Company will pay any additional consideration in cash or, at the Company’s option in certain instances, in additional shares following such date. The Company made a preliminary allocation of the purchase price as of the date of the acquisition. The Company will continue to adjust the allocations until final valuation of the assets and liabilities are completed.

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

     The new accounting guidance adopted on business combinations requires contingent consideration to be recognized at its acquisition date fair value. Based on the terms of the arrangement, the Company has classified the contingent consideration as a liability. This new guidance requires such liabilities to be remeasured to fair value at each reporting date until the contingency is resolved, with changes in fair value being recognized in earnings. The Company estimated the fair value of the contingent consideration for the TNK-OFS acquisition at the date of acquisition to be a liability of $84 million. This liability was estimated to have a fair value of $57 million at September 30, 2009, resulting in a gain of $27 million being recognized during the three months ended September 30, 2009. This gain was recorded in the Selling, General and Administrative Attributable to Segments line in the Condensed Consolidated Statement of Income. The valuation of the contingent consideration was determined using a lattice-based model incorporating the term of the contingency, the share price of the Company over the relevant periods and the volatility of the Company’s shares.

     During the nine months ended September 30, 2009, the Company acquired businesses for cash consideration of $23 million and approximately 35 million common shares valued at $673 million, which includes the TNK-OFS acquisition.

3. Equity Investment Acquisition

     The Company acquired a 33% ownership interest in Premier Business Solutions (“PBS”) in June 2007 for approximately $330 million. PBS is the world’s largest electric submersible pump manufacturer by volume. In January 2008, the Company sold its electrical submersible pumps (“ESP”) product line to PBS and received a combination of cash and an additional equity investment in PBS in consideration of the sale. This transaction increased the Company’s ownership percentage to approximately 40%. In September 2009, the Company converted a $38 million note plus accrued interest due from PBS for an additional equity investment. The Company’s ownership percentage was unchanged as the other joint venture partner also converted its notes receivable for an additional equity investment. The Company’s investment in PBS is included in Equity Investments in the accompanying Condensed Consolidated Balance Sheets at September 30, 2009 and December 31, 2008.

4. Discontinued Operations

     In 2007, the Company’s management approved a plan to sell its oil and gas development and production business. The Company finalized the divestiture of the business in September 2008 and recorded an $11 million gain, net of taxes, during the three months ended June 30, 2008. This gain was partially offset by operating and legal expenses incurred during the period. Included in the loss for the nine months ended September 30, 2008, is approximately $21 million, net of taxes, incurred in connection with the settlement of a legal dispute regarding the business.

5. Inventories

     The components of inventory were as follows:

		September 30,				December 31,
		2009				2008
		(In thousands)
Raw materials, components and supplies		$	340,595			$	346,258
Work in process			131,129				152,864
Finished goods			1,835,935				1,589,220
		$	2,307,659			$	2,088,342

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

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

6. Goodwill

     Goodwill is evaluated for impairment on at least an annual basis. The Company will be performing its 2009 annual goodwill impairment test during the fourth quarter using an effective date of October 1. The Company’s 2008 impairment tests indicated goodwill was not impaired. The Company will continue to test its goodwill annually as of October 1 unless events occur or circumstances change between annual tests that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

     The changes in the carrying amount of goodwill for the nine months ended September 30, 2009 were as follows:

						Middle East/				Europe/
		North				North				West Africa/				Latin
		America				Africa/ Asia				FSU				America				Total
		(In thousands)
Balance at December 31, 2008		$	1,813,710			$	675,558			$	734,930			$	306,717			$	3,530,915
Acquisitions			111,571				40,197				266,874				13,399				432,041
Disposals			(4,747	)			—				—				—				(4,747	)
Purchase price and Other Adjustments			13,909				8,890				12,035				71				34,905
Foreign currency Translation			91,004				13,853				55,022				6,213				166,092
Balance at September 30, 2009		$	2,025,447			$	738,498			$	1,068,861			$	326,400			$	4,159,206

7. Short-term Borrowings and Current Portion of Long-term Debt

     The components of short-term borrowings were as follows:

		September 30,				December 31,
		2009				2008
		(In thousands)
Revolving credit facilities		$	973,500			$	1,068,000
Commercial paper program			—				127,884
Other short-term bank loans			33,951				44,205
Total short-term borrowings			1,007,451				1,240,089
Current portion of long-term debt			13,672				15,858
Short-term borrowings and current portion of long-term debt		$	1,021,123			$	1,255,947

     In January 2009, the Company completed a $1.25 billion long-term debt offering comprised of (i) $1 billion of 9.625% senior notes due in 2019 (“9.625% Senior Notes”) and (ii) $250 million of 9.875% senior notes due in 2039 (“9.875% Senior Notes”). Net proceeds of $1.23 billion were used to repay short-term borrowings and for general corporate purposes. Interest on these notes is due semi-annually on March 1 and September 1 of each year.

     The Company maintains various revolving credit facilities with syndicates of banks. At September 30, 2009, these facilities allow for an aggregate availability of $2.3 billion, and can be used for a combination of borrowings, support of our commercial paper program and issuances of letters of credit. Facilities with $550 million in availability matured in October 2009 and were not renewed. Our remaining facilities mature in May 2011. There were $74 million in outstanding letters of credit under these facilities at September 30, 2009.

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

     These borrowing facilities require the Company to maintain a debt-to-capitalization ratio of less than 60% and contain other covenants and representations customary for an investment-grade commercial credit. The Company was in compliance with these covenants at September 30, 2009.

     The Company has a $1.5 billion commercial paper program under which it may from time to time issue short-term unsecured notes. The commercial paper program is supported by the Company’s revolving credit facilities. There was no commercial paper outstanding at September 30, 2009.

     The Company has short-term borrowings with various domestic and international institutions pursuant to uncommitted facilities. At September 30, 2009, the Company had $34 million in short-term borrowings outstanding under these arrangements with a weighted average interest rate of 1.7%. In addition, the Company had $189 million of letters of credit and bid and performance bonds outstanding under these uncommitted facilities.

     The Company’s short-term borrowings approximate their fair value at September 30, 2009 and December 31, 2008.

8. Fair Value of Financial Instruments

     Financial Instruments Measured and Recognized at Fair Value

     On January 1, 2008, the Company adopted new accounting guidance on fair value measurements. The new guidance defines fair value, established a framework for measuring fair value under U.S. generally accepted accounting principles, and expands disclosures about fair value measurements. The new guidance was effective for the Company beginning January 1, 2008, for certain assets and liabilities measured at fair value on a recurring basis. The new guidance was effective for non-financial assets and liabilities recognized or disclosed at fair value on a nonrecurring basis beginning January 1, 2009.

     The accounting guidance establishes a valuation hierarchy for disclosure of the inputs to the valuations used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based upon our own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement.

     The following table presents the Company’s non-derivative assets and liabilities that are measured and recognized at fair value on a recurring basis classified under the appropriate level of the fair value hierarchy as of September 30, 2009 and December 31, 2008:

		September 30, 2009
		Level 1		Level 2				Level 3				Total
				(In thousands)
Other Assets:
Other investments		$—		$	39,403			$	—			$	39,403
Other Current Liabilities:
Contingent consideration on acquisition (See Note 2)		—			—				56,468				56,468

		December 31, 2008
		Level 1		Level 2				Level 3		Total
		(In thousands)
Other Assets:
Other investments		$—		$	30,611			$—		$	30,611

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

     The following table provides a summary of changes in fair value of the Company’s Level 3 financial liability as of September 30, 2009 and 2008:

		Three Months								Nine Months
		Ended September 30,								Ended September 30,
		2009				2008				2009				2008
						(In thousands)
Balance at beginning of period		$	—			$	—			$	—			$	—
Contingent consideration on acquisition (See Note 2)			(83,836	)			—				(83,836	)			—
Unrealized gain on contingent consideration on acquisition included in earnings			27,368				—				27,368				—
Balance at end of period		$	(56,468	)		$	—			$	(56,468	)		$	—

     The $27 million gain recorded during the three months ended September 30, 2009 is included in the Selling, General and Administrative Attributable to Segments line in the Condensed Consolidated Statements of Income.

     Fair Value of Other Financial Instruments

     The Company’s other financial instruments include cash and cash equivalents, foreign currency exchange contracts, interest rate swaps, accounts receivable, notes receivable, accounts payable and short and long-term debt. With the exception of long-term debt, the carrying value of these financial instruments approximates their fair value.

     The fair value of outstanding debt fluctuates with changes in applicable interest rates. Fair value will exceed carrying value when the current market interest rate is lower than the interest rate at which the debt was originally issued. The fair value of a company’s debt is a measure of its current value under present market conditions. It does not impact the financial statements under current accounting rules. The fair value and carrying value of the Company’s long-term debt is as follows:

		September 30,				December 31,
		2009				2008
		(In thousands)
Fair value		$	6,345,702			$	3,991,879
Carrying value			5,851,678				4,564,255

     The fair value of the Company’s long-term debt was estimated based on quoted market prices.

9. Derivative Instruments

     On January 1, 2009, the Company adopted new accounting guidance regarding derivative and hedging activity. Entities are now required to provide enhanced disclosures about how and why they use derivative instruments, how derivative instruments and related hedged items are accounted for, and how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows.

     The Company is exposed to market risk from changes in foreign currency and changes in interest rates. From time to time, the Company may enter into derivative financial instrument transactions to manage or reduce its market risk, but does not enter into derivative transactions for speculative purposes. The Company manages its debt portfolio to achieve an overall desired position of fixed and floating rates and may employ interest rate swaps as a tool to achieve that goal. The major risks from interest rate derivatives include changes in the interest rates affecting the fair value of such instruments, potential increases in interest expense due to market increases in floating interest rates and the creditworthiness of the counterparties in such transactions. In light of recent events in the global credit markets and the potential impact of these events on the liquidity of the banking industry, the Company continues to monitor the creditworthiness of its counterparties, which are multinational commercial banks.

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

     The fair values of all the Company’s outstanding derivative instruments are determined using a model with Level 2 inputs including quoted market prices for contracts with similar terms and maturity dates.

     Interest Rate Swaps

     In August 2009, the Company entered into interest rate swap agreements to pay a variable interest rate and receive a fixed interest rate with an aggregate notional amount of $1.2 billion against its 5.15%, 5.50% and 9.625% Senior Notes. These agreements are designated as fair value hedges and are determined to be highly effective resulting in no net gain or loss recorded in the Condensed Consolidated Statements of Income as the changes in the fair values of the interest rate swaps will be offset by changes in fair values of the underlying debt. The aggregate fair value of the interest rate swaps at September 30, 2009 resulted in an asset of $48 million, with a corresponding increase to Long-term Debt on the accompanying Condensed Consolidated Balance Sheets.

     In December 2008, the Company entered into an interest rate swap agreement on an aggregate notional amount of $150 million against one of its revolving credit facilities. This agreement matured in June 2009.

     Upon completion of the long-term debt offering in March 2008, the Company entered into interest rate swap agreements on an aggregate notional amount of $500 million against its 5.15% senior notes due in 2013 (“5.15% Senior Notes”). These agreements were terminated in December 2008. As a result of these terminations, the Company received cash proceeds, net of accrued interest, of $12 million. The gain associated with this interest rate swap termination has been deferred and will be amortized to interest expense over the remaining term of the 5.15% Senior Notes.

     Cash Flow Hedges

     In March 2008, the Company entered into interest rate derivative instruments for a notional amount of $500 million to hedge projected exposures to interest rates in anticipation of the issuance of the 7.00% senior notes due in 2038 (“7.00% Senior Notes”). Those hedges were terminated in March 2008 at the time of the issuance. The Company paid a cash settlement of $13 million at termination, and the loss on these hedges is being amortized to interest expense over the life of the 7.00% Senior Notes.

     Other Derivative Instruments

     As of September 30, 2009, the Company had several foreign currency forward and option contracts with notional amounts aggregating $1.0 billion, which were entered into to hedge exposure to currency fluctuations in various foreign currencies, including, but not limited to, the British pound sterling, the Canadian dollar, the euro and the Norwegian kroner. The total estimated fair value of these contracts at September 30, 2009 resulted in a net liability of $11 million. These derivative instruments were not designated as hedges and the changes in fair value of the contracts are recorded each period in Other, net in the accompanying Condensed Consolidated Statements of Income.

     In addition, after the closing of the acquisition of Precision Energy Services and Precision Drilling International, the Company entered into a series of cross-currency swaps between the U.S. dollar and Canadian dollar to hedge certain exposures to the Canadian dollar created as a result of the acquisition. At September 30, 2009, the Company had notional amounts outstanding of $168 million. The total estimated fair value of these contracts at September 30, 2009 resulted in a liability of $16 million. These derivative instruments were not designated as hedges and the changes in fair value of the contracts are recorded each period in Other, net in the accompanying Condensed Consolidated Statements of Income.

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

     The fair values of outstanding derivative instruments are summarized as follows:

		September 30,				December 31,
		2009				2008				Classifications
		(In thousands)
Derivative assets designated as hedges:
Interest rate swap agreements		$	47,774			$	—			Other Assets
Derivative assets not designated as hedges:
Foreign exchange contracts			19,504				—			Other Current Assets
Foreign exchange contracts			—				1,455			Other Assets
Derivative liabilities not designated as hedges:
Foreign exchange contracts			30,867				2,233			Other Current Liabilities
Foreign exchange contracts			15,817				—			Other Liabilities

10. Income Taxes

     The Company’s third quarter 2009 results reflect a tax benefit of $34 million. The benefit this quarter primarily relates to a true-up of its effective tax rate from 14.5% year-to-date at June 30, 2009 to 1.1% year-to-date at September 30, 2009. The Company’s effective tax rates for the three and nine months ended September 30, 2008 were 17.8% and 17.0%, respectively. The decrease in the effective tax rate compared to 2008 is primarily due to a larger than originally forecasted decrease in earnings in certain jurisdictions, largely in North America, with no corresponding decrease in certain forecasted tax deductions.

11. Shareholders’ Equity

     The following summarizes the Company’s shareholders’ equity activity for the period presented:

										Noncontrolling
		Total				Company				Interests in
		Shareholders’				Shareholders’				Consolidated
		Equity				Equity				Subsidiaries
						(In thousands)
Balance at December 31, 2008		$	8,366,049			$	8,285,648			$	80,401
Comprehensive Income:
Net income			307,175				284,157				23,018
Amortization of pension components			6,464				6,464				—
Foreign currency translation adjustments			306,377				306,498				(121	)
Other			456				456				—
Comprehensive income			620,472				597,575				22,897
Transactions with shareholders			752,005				752,005				—
Dividends paid to noncontrolling interests			(25,047	)			—				(25,047	)
Other			3,118				—				3,118
Balance at September 30, 2009		$	9,716,597			$	9,635,228			$	81,369

12. Earnings Per Share

     Basic earnings per share for all periods presented equals net income divided by the weighted average number of the Company’s registered shares, par value CHF 1.16 (“Registered Shares”), outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of Registered

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

Shares outstanding during the period, as adjusted for the dilutive effect of the Company’s stock option and restricted share plans and warrant.

     The Company adopted new accounting guidance related to determining whether instruments granted in share-based payment transactions are participating securities, effective January 1, 2009. Under this guidance, unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are participating securities and shall be included in the computation of earnings-per-share pursuant to the two-class method. Accordingly, the Company now includes its restricted share awards that contain the right to vote and receive dividends in the computation of both basic and diluted earnings per share. This guidance has not been applied to prior periods as the impact is immaterial.

     The Company’s Board of Directors approved a two-for-one share split of its common shares effected through a share dividend. Shareholders of record on May 9, 2008 were entitled to the dividend, which was distributed on May 23, 2008. All share and option amounts included in the accompanying consolidated financial statements and related notes reflect the effect of the share split.

     The following reconciles basic and diluted weighted average shares outstanding:

		Three Months								Nine Months
		Ended September 30,								Ended September 30,
		2009				2008				2009				2008
						(In thousands)
Basic weighted average shares outstanding			724,114				682,532				707,621				681,531
Dilutive effect of:
Warrant			3,163				7,553				1,756				7,626
Stock option and restricted share plans			7,832				11,199				6,342				10,942
Diluted weighted average shares outstanding			735,109				701,284				715,719				700,099

     The diluted earning per share calculation excludes three million potential shares for the three months ended September 30, 2009 and nine million potential shares for the nine months ended September 30, 2009, due to their antidilutive effect. Antidilutive potential shares were not significant for the three and nine months ended September 30, 2008.

13. Share-Based Compensation

     The Company recognized the following employee share-based compensation expense during the three and nine months ended September 30, 2009 and 2008:

		Three Months								Nine Months
		Ended September 30,								Ended September 30,
		2009				2008				2009				2008
		(In thousands)
Share-based compensation		$	30,090			$	26,626			$	85,136			$	74,760
Related tax benefit			10,532				9,319				29,798				26,166

     During the nine months ended September 30, 2009, the Company granted seven million restricted share awards and units at a weighted average grant date fair value of $13.40 per share.

     As of September 30, 2009, there was $241 million of total unrecognized compensation cost related to the Company’s unvested stock options and restricted share grants. This cost is expected to be recognized over a weighted-average period of two years

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

14. Retirement and Employee Benefit Plans

     The Company has defined benefit pension and other post retirement benefit plans covering certain employees. The components of net periodic benefit cost for the three and nine months ended September 30, 2009 and 2008 were as follows:

		Three Months Ended September 30,
		2009								2008
		United								United
		States				International				States				International
						(In thousands)
Service cost		$	891			$	1,778			$	720			$	3,413
Interest cost			1,892				1,772				1,511				2,551
Expected return on plan assets			(166	)			(1,043	)			(179	)			(2,233	)
Amortization of transition obligation			—				—				—				(1	)
Amortization of prior service cost (credit)			997				(13	)			458				(19	)
Amortization of loss			1,617				249				964				102
Curtailment/settlement loss			—				—				—				—
Net periodic benefit cost		$	5,231			$	2,743			$	3,474			$	3,813

		Nine Months Ended September 30,
		2009								2008
		United								United
		States				International				States				International
						(In thousands)
Service cost		$	2,672			$	5,063			$	2,160			$	10,456
Interest cost			5,677				5,022				4,533				7,820
Expected return on plan assets			(497	)			(2,976	)			(537	)			(6,859	)
Amortization of transition obligation			—				(1	)			—				(3	)
Amortization of prior service cost (credit)			2,990				(36	)			1,374				(59	)
Amortization of loss			4,851				712				2,892				310
Curtailment/settlement loss			1,063				—				5,621				—
Net periodic benefit cost		$	16,756			$	7,784			$	16,043			$	11,665

     The Company previously disclosed in its financial statements for the year ended December 31, 2008, that it expected to contribute approximately $10 million to its pension and other postretirement benefit plans during 2009. Due to the amendment of one of our foreign plans, the Company currently anticipates total 2009 contributions for the defined benefit plans to approximate $7 million. As of September 30, 2009, the Company has contributed approximately $6 million to these plans.

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

15. Segment Information

     Financial information by segment is summarized below. Revenues are attributable to countries based on the ultimate destination of the sale of products or performance of services. The accounting policies of the segments are the same as those described in the summary of significant accounting policies.

		Three Months Ended September 30, 2009
		Net				Income				Depreciation				Total Assets at
		Operating				from				and				September 30,
		Revenues				Operations				Amortization				2009
		(In thousands)
North America		$	620,496			$	33,259			$	79,737			$	6,548,850
Middle East/North Africa/Asia			600,110				101,943				65,771				4,509,618
Europe/West Africa/FSU(a)			404,390				71,836				44,864				3,564,122
Latin America			524,883				54,343				43,403				2,960,216
			2,149,879				261,381				233,775				17,582,806
Corporate and Research and Development			—				(93,572	)			4,134				1,102,484
Other (b)			—				(17,887	)			—				—
Total		$	2,149,879			$	149,922			$	237,909			$	18,685,290

		Three Months Ended September 30, 2008
		Net				Income				Depreciation				Total Assets at
		Operating				from				and				December 31,
		Revenues				Operations				Amortization				2008
		(In thousands)
North America		$	1,179,605			$	312,887			$	79,619			$	6,541,697
Middle East/North Africa/Asia			637,872				146,450				49,138				4,320,875
Europe/West Africa/FSU			408,993				102,385				31,911				2,641,687
Latin America			314,326				69,521				23,561				2,010,313
			2,540,796				631,243				184,229				15,514,572
Corporate and Research and Development			—				(82,776	)			2,902				961,941
Other (c)			—				(13,727	)			—				—
Total		$	2,540,796			$	534,740			$	187,131			$	16,476,513

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

		Nine Months Ended September 30, 2009
		Net				Income				Depreciation
		Operating				from				and
		Revenues				Operations				Amortization
						(In thousands)
North America		$	2,029,264			$	155,586			$	232,088
Middle East/North Africa/Asia			1,774,964				359,522				184,326
Europe/West Africa/FSU(d)			1,138,201				209,393				114,732
Latin America			1,458,423				232,319				109,816
			6,400,852				956,820				640,962
Corporate and Research and Development			—				(269,139	)			12,034
Other (e)			—				(73,669	)			—
Total		$	6,400,852			$	614,012			$	652,996

		Nine Months Ended September 30, 2008
		Net				Income				Depreciation
		Operating				from				and
		Revenues				Operations				Amortization
		(In thousands)
North America		$	3,282,211			$	828,792			$	229,499
Middle East/North Africa/Asia			1,716,007				397,774				140,856
Europe/West Africa/FSU			1,146,185				294,614				86,132
Latin America			821,535				188,374				63,611
			6,965,938				1,709,554				520,098
Corporate and Research and Development			—				(238,752	)			8,031
Other (f)			—				(23,604	)			—
Total		$	6,965,938			$	1,447,198			$	528,129

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

16. Disputes, Litigation and Contingencies

     U.S. Government and Internal Investigations

     The Company is currently involved in government and internal investigations involving various areas of its operations.

     The Company participated in the United Nations oil-for-food program governing sales of goods and services into Iraq. The U.S. Department of Justice (“DOJ”) and the SEC are conducting investigations of the Company’s participation in the oil-for-food program and have subpoenaed certain documents in connection with these investigations. The Company is cooperating fully with these investigations. The Company has retained legal counsel, reporting to its audit committee, to investigate this matter. These investigations are ongoing, and the Company cannot anticipate the timing, outcome or possible impact of these investigations, financial or otherwise.

     The U.S. Department of Commerce, Bureau of Industry & Security, Office of Foreign Assets Control (“OFAC”), DOJ and SEC are investigating allegations of improper sales of products and services by the Company and its subsidiaries in certain sanctioned countries. The Company is cooperating fully with this investigation. The Company has retained legal counsel, reporting to its audit committee, to investigate these matters and to cooperate fully with these agencies. This investigation is ongoing, and the Company cannot anticipate the timing, outcome or possible impact of the investigation, financial or otherwise.

     In light of this investigation and of the current U.S. and foreign policy environment and the inherent uncertainties surrounding these countries, the Company decided in September 2007 to direct its foreign subsidiaries to discontinue doing business in countries that are subject to comprehensive U.S. economic and trade sanctions, specifically Cuba, Iran, and Sudan, as well as Syria. Effective September 2007, the Company ceased entering into any new contracts in these countries and began an orderly discontinuation and winding down of its existing business in these sanctioned countries. Effective March 31, 2008, the Company substantially completed its winding down of business in these countries. The Company can complete the withdrawal process only pursuant to licenses issued by OFAC. The Company’s remaining activities in Iran, Sudan and Syria include ongoing withdrawal activities such as attempts to collect accounts receivable, attempts to settle tax liabilities or legal claims and attempts to recover or liquidate assets, including equipment and funds. Certain of the Company’s subsidiaries continue to conduct business in countries such as Myanmar that are subject to more limited U.S. trading sanctions.

     The DOJ and SEC are investigating the embezzlement of approximately $175,000 at a European subsidiary and the possible improper use of these funds, including possible payments to government officials in Europe, during the period from 2000 to 2004, and the Company’s compliance with the Foreign Corrupt Practices Act (“FCPA”) and other laws worldwide. The Company has retained legal counsel, reporting to its audit committee, to investigate these matters and to cooperate fully with the DOJ and SEC. As part of its investigations, the Company has uncovered potential violations of U.S. law in connection with activities in West Africa. These investigations are ongoing, and the Company cannot anticipate the timing, outcome or possible impact, if any, of the investigations, financial or otherwise.

     The DOJ, SEC and other agencies and authorities have a broad range of civil and criminal penalties they may seek to impose against corporations and individuals for violations of trade sanctions laws, the FCPA and other federal statutes including, but not limited to, injunctive relief, disgorgement, fines, penalties and modifications to business practices and compliance programs. In recent years, these agencies and authorities have entered into agreements with, and obtained a range of penalties against, several public corporations and individuals in similar investigations, under which civil and criminal penalties were imposed, including in some cases fines and other penalties and sanctions in the tens and hundreds of millions of dollars. Under trade sanctions laws, the DOJ may also seek to impose modifications to business practices, including immediate cessation of all business activities in sanctioned countries, and modifications to compliance programs, which may increase compliance costs. In addition, the Company’s activities in sanctioned countries, such as Sudan and Iran, could result in certain investors, such as government sponsored pension funds, divesting or not investing in its registered shares. Based on available information, the Company cannot predict what, if any, actions the DOJ, SEC or other authorities will take in its situation or the effect any such actions will have on its consolidated financial position or results of operations. To

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

the extent the Company violated trade sanctions laws, the FCPA, or other laws or regulations, fines and other penalties may be imposed. Because these matters are now pending before the indicated agencies, there can be no assurance that actual fines or penalties, if any, will not have a material adverse affect on its business, financial condition, liquidity or results of operations.

     During the nine months ended September 30, 2009 and 2008, the Company incurred $36 million and $33 million, respectively, in connection with these on-going investigations. In addition, the Company incurred $57 million for costs incurred in connection with our exit from certain sanctioned countries during the nine months ended September 30, 2008.

     Other Litigation and Disputes

     The Company is aware of various disputes and potential claims and is a party in various litigation involving claims against the Company, some of which are covered by insurance. Based on facts currently known, the Company believes that the liability, if any, which may result from known claims, disputes and pending litigation, would not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

17. Commitments and Contingencies

     In association with a prior acquisition, the Company identified pre-acquisition contingencies related to duties and taxes associated with the importation of certain equipment assets to foreign jurisdictions. At September 30, 2009, the Company has a liability in the amount of $9 million for this matter. If the Company used the high end of the range, the aggregate potential liability would be approximately $10 million higher.

     The Company’s former Senior Vice President and General Counsel (the “Executive”) left the Company in June 2009. The Executive had employment agreements with the Company that terminated on his departure. There is currently a dispute between the Executive and the Company as to the amount of compensation the Company is obligated to pay under these employment agreements based on the Executive’s separation. It is the Company’s belief that an unfavorable outcome regarding this dispute is not probable, and as such, the Company has not accrued for $9 million of the Executive’s claimed severance and other benefits.

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

18. Condensed Consolidating Financial Statements

     During the first quarter of 2009, the Company completed a transaction that changed its place of incorporation from Bermuda to Switzerland. A new Swiss corporation named Weatherford International Ltd. was formed and is now the ultimate parent (“Weatherford Switzerland”) of the Weatherford group. It guarantees the obligations of Weatherford International Ltd. incorporated in Bermuda (“Weatherford Bermuda”) and Weatherford International, Inc. incorporated in Delaware (“Weatherford Delaware”) noted below.

     The following obligations of Weatherford Delaware were guaranteed by Weatherford Bermuda at September 30, 2009 and December 31, 2008: (i) the 6.625% Senior Notes, (ii) the 5.95% Senior Notes, (iii) the 6.35% Senior Notes and (iv) the 6.80% Senior Notes.

     The following obligations of Weatherford Bermuda were guaranteed by Weatherford Delaware at September 30, 2009: (i) the revolving credit facilities, (ii) the 4.95% Senior Notes, (iii) the 5.50% Senior Notes, (iv) the 6.50% Senior Notes, (v) the 5.15% Senior Notes, (vi) the 6.00% Senior Notes, (vii) the 7.00% Senior Notes (viii) the 9.625% Senior Notes, (ix) the 9.875% Senior Notes and (x) issuances of notes under the commercial paper program.

     The following obligations of Weatherford Bermuda were guaranteed by Weatherford Delaware at December 31, 2008: (i) the revolving credit facilities, (ii) the 4.95% Senior Notes, (iii) the 5.50% Senior Notes, (iv) the 6.50% Senior Notes, (v) the 5.15% Senior Notes, (vi) the 6.00% Senior Notes, (vii) the 7.00% Senior Notes and (viii) issuances of notes under the commercial paper program.

     As a result of these guarantee arrangements, the Company is required to present the following condensed consolidating financial information. The accompanying guarantor financial information is presented on the equity method of accounting for all periods presented. Under this method, investments in subsidiaries are recorded at cost and adjusted for the Company’s share in the subsidiaries’ cumulative results of operations, capital contributions and distributions and other changes in equity. Elimination entries relate primarily to the elimination of investments in subsidiaries and associated intercompany balances and transactions. Certain prior year amounts have been reclassified to conform to the current year presentation.

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

Condensed Consolidating Balance Sheet
September 30, 2009
(unaudited)
(In thousands)

														Other
		Parent				Bermuda				Delaware				Subsidiaries				Eliminations				Consolidation
ASSETS
Current Assets:
Cash and Cash Equivalents		$	65			$	54			$	1,885			$	304,591			$	—			$	306,595
Other Current Assets			864				17,641				109,135				5,662,013				—				5,789,653
Total Current Assets			929				17,695				111,020				5,966,604				—				6,096,248
Equity Investments in Affiliates			8,599,697				15,040,790				6,718,553				12,272,934				(42,631,974	)			—
Shares Held in Parent			—				—				116,896				507,777				(624,673	)			—
Intercompany Receivables, Net			—				1,674,666				945,498				—				(2,620,164	)			—
Other Assets			1,622				117,051				226,625				12,243,744				—				12,589,042
Total Assets		$	8,602,248			$	16,850,202			$	8,118,592			$	30,991,059			$	(45,876,811	)		$	18,685,290
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Short-term Borrowings and Current Portion of Long-Term Debt		$	—			$	321,087			$	1,840			$	698,196			$	—			$	1,021,123
Accounts Payable and Other Current Liabilities			374				44,773				59,040				1,623,304				—				1,727,491
Total Current Liabilities			374				365,860				60,880				2,321,500				—				2,748,614
Long-term Debt			—				3,989,692				1,848,507				13,479				—				5,851,678
Intercompany Payables, Net			37,010				—				—				2,583,154				(2,620,164	)			—
Other Long-term Liabilities			—				119,090				2,353				246,958				—				368,401
Total Liabilities			37,384				4,474,642				1,911,740				5,165,091				(2,620,164	)			8,968,693
Weatherford Shareholders’ Equity			8,564,864				12,375,560				6,206,852				25,744,599				(43,256,647	)			9,635,228
Noncontrolling Interests			—				—				—				81,369				—				81,369
Total Liabilities and Shareholders’ Equity		$	8,602,248			$	16,850,202			$	8,118,592			$	30,991,059			$	(45,876,811	)		$	18,685,290

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

Condensed Consolidating Balance Sheet
December 31, 2008
(In thousands)

										Other
		Bermuda				Delaware				Subsidiaries				Eliminations				Consolidation
ASSETS
Current Assets:
Cash and Cash Equivalents		$	24			$	50			$	238,324			$	—			$	238,398
Other Current Assets			11,547				90,626				5,229,711				—				5,331,884
Total Current Assets			11,571				90,676				5,468,035				—				5,570,282
Equity Investments in Affiliates			14,335,661				6,231,144				12,611,943				(33,178,748	)			—
Shares Held in Parent			¾				133,519				625,958				(759,477	)			—
Intercompany Receivables, Net			1,289,507				906,534				¾				(2,196,041	)			—
Other Assets			59,325				184,869				10,662,037				—				10,906,231
Total Assets		$	15,696,064			$	7,546,742			$	29,367,973			$	(36,134,266	)		$	16,476,513
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Short-term Borrowings and Current Portion of Long-term Debt		$	781,443			$	1,758			$	472,746			$	—			$	1,255,947
Accounts Payable and Other Current Liabilities			59,534				39,764				1,666,848				—				1,766,146
Total Current Liabilities			840,977				41,522				2,139,594				—				3,022,093
Long-term Debt			2,701,747				1,849,428				13,080				—				4,564,255
Intercompany Payables, Net			—				¾				2,196,041				(2,196,041	)			—
Other Long-term Liabilities			110,627				2,502				410,987				—				524,116
Total Liabilities			3,653,351				1,893,452				4,759,702				(2,196,041	)			8,110,464
Weatherford Shareholders’ Equity			12,042,713				5,653,290				24,527,870				(33,938,225	)			8,285,648
Noncontrolling Interests			—				—				80,401				—				80,401
Total Liabilities and Shareholders’ Equity		$	15,696,064			$	7,546,742			$	29,367,973			$	(36,134,266	)		$	16,476,513