Fear of Democrat policies have repercussions

Another oil firm puts base overseas
Weatherford says Switzerland near key markets
By BRETT CLANTON Copyright 2008 Houston Chronicle
Dec. 11, 2008, 11:47PM


Michael Paulsen Chronicle
"We're not trying to dismantle what we have in Houston," Weatherford Chairman and CEO Bernard Duroc-Danner said.

COMPANY PROFILE Weatherford International operates in more than 100 countries providing products and services for oil and gas drilling, evaluation, completion, production and intervention.
• Founded: 1987• Employees: More than 46,700• 2007 revenue: $7.8 billion• 2007 net income: $1.1 billion in 2007
Source: Weatherford International


The chief executive of Weatherford International said Thursday he and his company headquarters will move from Houston to Switzerland, joining at least two other top Houston oil services executives in seeking closer proximity to emerging oil producing regions overseas.
Halliburton Co. relocated its top executives to a Dubai headquarters in 2007 and offshore driller Transocean has announced plans to move to Geneva.

Houston will become a regional headquarters for Weatherford, and could lose perhaps dozens of managers and engineers to a new office in Geneva.

Yet the company's hometown will still be a key hub for its North American operations and should not be greatly affected by the change, Weatherford Chairman and CEO Bernard J. Duroc-Danner said in an interview with the Houston Chronicle.

"The U.S. is an important market," he said. "It's just a market. It is not the primary market."
The move highlights the increasing shift in focus by U.S. oil field services firms from mature North American markets to fast-growing nations in the Eastern Hemisphere.
Growing needsWith commodity prices high in recent years, China, countries in the former Soviet Union, Africa and the Middle East have paid top dollar for western expertise that will allow them to unlock oil and natural gas reserves to feed their growing energy needs.

The trend has been a boon for services firms like Weatherford, which works on a contract basis to provide virtually every service involved in converting a discovery into a producing well.
In 2009, more than 50 percent of Weatherford's business will be in the Eastern Hemisphere, and it should grow to 60 percent in a few years, Duroc-Danner said. The U.S. will probably be 25 percent or less.

"Although we were born and raised in Houston ... the reality is we have to be closer to our markets," he said.

Weatherford has about 2,600 employees in the area out of more than 46,700 worldwide. Duroc-Danner said the number of managers and engineers who leave Houston for Geneva will be in the "tens and twenties," while the rest will remain.

On Wednesday, Weatherford said its board of directors voted to move the company's place of incorporation from Bermuda to Switzerland. While run from Houston, the company has been domiciled in Bermuda since 2002.

If approved by shareholders and the Supreme Court of Bermuda, the change could be effective by early 2009, the company said.

In addition to putting the company closer to key growth markets, the move will give the firm access to a corporate-friendly Swiss tax structure that will only tax its domestic income, rather than its worldwide income, Duroc-Danner said.

Multinational U.S. oil field services firms have long complained that while much of their income is earned overseas, it is taxed as if it were earned in the U.S. Bermuda is a tax haven, but lacks the same tax treaties the U.S. has with Switzerland, and Congress is considering tightening restrictions on companies headquartered in such countries.

Similar movesU.S. oil field services firms also worry that the incoming Democratic administration and more solidly Democratic Congress will raise corporate taxes, and that may have spurred some companies to set up offices abroad, said Neal Dingmann, an industry analyst with Dahlman Rose & Co. in Houston.

Transocean, the world's largest driller, also run from Houston, said in October it would seek to change its incorporation from the Cayman Islands to Switzerland. The move has been approved by shareholders but is awaiting approval by a Cayman Island court. If approved, 14 company officers, including CEO Robert Long, will leave Houston to run the new headquarters in Geneva.
Last year, Halliburton CEO Dave Lesar left Houston to open a dual headquarters in Dubai.
Duroc-Danner, a native of France, said he still expects to spend about 20 percent of his time in Houston.

After living in Houston for 20 years, building a family and growing the company, he said the city has become home, and he wants it to remain an important part of the company.
"We're not trying to dismantle what we have in Houston," he said. "It's just that in terms of being in the hierarchical pecking order, it's not going to be Rome anymore."