Last night, Wildcatters Portfolio holding Weatherford International (NYSE: WFT) filed a notice with the Securities and Exchange Commission (SEC) indicating that that the company will adjust its 2007-10 results by a total of about $500 million. That works out to an annual restatement of about $100 to $150 million per year. This morning, the company also hosted a conference call to discuss the restatement in depth.

The stock opened today’s trading session at roughly $20 per share, down about 15 percent from its prior closing price.

Unfortunately, such surprises are part of the business. Every now and then, a company in which you’ve invested will unexpectedly reveal some negative news. No matter how much due diligence you do, you can never fully protect yourself from unforeseen events. At this juncture, how you react to the news is critical. Don’t panic. Step back and take a level-headed view of the announcement and its likely effect on the company’s results.

First, consider the scale of the adjustment. Weatherford International generated about $10 billion in revenue over the past 12 months; a $150 million annual adjustment amounts to roughly 1.5 percent of the firm’s revenue. The company’s 2010 earnings before interest, taxation, depreciation and amortization (EBITDA) were about $2 billion, so the average annual adjustment was 7.5 percent of that amount. Also keep in mind that the 2010 marked a year of recovery for oil and gas services firms, not the peak of the industry’s business cycle.

In this light, the earnings adjustment is significant but far from debilitating.

Second, management emphasized that these were tax-related adjustments which wouldn’t affect the company’s reported operating cash flow or EBITDA. Moreover, the restatement won’t change the covenants governing Weatherford International’s debt. Management did indicate that the firm’s reported tax rate would temporarily increase, but also emphasized that this rate would return to a normal range over time.

The only way to justify the big drop in the company’s shares is the cockroach theory: the idea that where there’s one problem, there could be more. Ever since the Enron and WorldCom scandals, investors are sensitive to accounting restatements.

But this restatement isn’t in the same league; the market’s reaction appears overdone. Management has indicated that this restatement has no impact on their pre-tax operating results. That the other major oil services firms–Baker Hughes (NYSE: BHI), Halliburton (NYSE: HAL) and Schlumberger (NYSE: SLB)–have reported similar revenue trends and results lends credence to management’s claim.

Weatherford International boasts operations around the globe, and tax regimes vary significantly in different nations. Needless to say, the company’s taxes are complicated. Although the firm made some mistakes in dealing with all of these moving parts, the underlying business trends remain sanguine.

When the company releases its SEC 10-K form over the next two weeks, we’ll have more information about the future impact of these accounting changes. The news likely won’t be as bad as some investors fear; management teams typically reveal the worst-case scenario when issuing a press release about an accounting restatement.

We maintain our buy rating on Weatherford International because the oilfield services business is in the early stages of a multiyear growth cycle. The firm’s superior exposure to international markets–a key growth driver in back half of 2011 and early 2012–should be a major catalyst for revenue growth and margin expansion. Moreover, the company’s North American exposure is heavily weighted toward oil-related plays, a favorable business mix at a time when natural gas prices are depressed and oil prices continue to climb.

The accounting restatement may weigh on earnings in the near-term, but Weatherford International’s intermediate- and long-term growth story remains intact.

Weatherford International also updated investors on the status of its operations in North Africa and the Middle East. Combined, Weatherford International derives about 3 percent of its revenue from Tunisia, Egypt, Yemen, Libya and Bahrain; the ongoing civil unrest isn’t a game-changer for the firm.

Management noted that the company has evacuated its employees from Libya, many of which would return when the situation has been resolved. The firm has about $141 million worth of assets and $76 million in cash and receivables in the country–modest exposure, especially when you consider that the firm is unlikely to lose all of those assets and cash.

Weatherford International remains a buy up to 28.