Exhibit 10.1

2004 Weatherford
Variable Compensation Plan

I.  PURPOSE

The Weatherford 2004 Variable Compensation Plan (the “Plan”) has been designed
to motivate and reward employees whose efforts impact the performance of
Weatherford International Ltd. and its subsidiaries and affiliates (the
“Company”) through the achievement of pre-established financial objectives. The
term “Corporate” for the purposes of this plan refers to Weatherford
International Ltd.

Performance under the Plan is measured on the Company’s fiscal (calendar) year
and any declared payments under the Plan are made after the end of the fiscal
year.

II.  ELIGIBILITY

Officers and key management employees of the Company are eligible to participate
in the Plan upon designation by the Chief Executive Officer of Weatherford. An
employee who is eligible to participate in a sales commission plan of the
Company is not eligible to participate in the Plan. Eligibility of employees on
day rates, per diems and special pay programs will be determined by Division
Presidents for their Divisions. Participation in the Plan is not automatic and
only those eligible employees who have been designated by the Chief Executive
Officer shall actually participate in the Plan. Employees must have six months
of employment to be eligible for the plan. Bonus payments for employees not
employed for a full year will be prorated.

III.  AWARD CRITERIA

The Compensation Committee of the Board and the Chief Executive Officer of
Weatherford are responsible for approving the Company performance objectives
that are used to determine awards paid for Company objectives under this Plan.
Performance objectives for operating units below the corporate level will be
established by the appropriate manager subject to overall approval of the Chief
Executive Officer. For 2004, performance under the Plan will be determined based
on:

EBIT (in absolute $ terms)
Working Capital Ratios

       percent (      %) of the Year 2004 bonus payout will be based on EBIT and
       percent (      %) on working capital ratios. The Company reserves the
right on a Company-wide or case-by-case basis to adjust the original EBIT and/or
Working Capital targets of the Divisions or Corporate to reflect the impact of
acquisitions, changes in our industry, changes in our financial performance and
any other circumstances at the sole discretion of the Company’s Chief Executive
Officer.

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Divisions for the purpose of this plan are Completions and Production Systems,
Drilling and Well Services and Corporate.

IV.  AWARD CATEGORIES

A participant may have Corporate Objectives and/or Division Objectives and/or
Group Objectives, depending on where employed.

V.  TARGET AWARDS

A target award percentage is established for each position eligible to
participate in the Plan. Target awards (TA’s) may vary depending on the
participant’s position and base pay.

Generally, the participating employee receives the TA when performance under the
Plan meets, but does not exceed, the pre-established performance objectives.

VI.  PERFORMANCE MEASUREMENT

     
Minimum
  This is the lowest level of performance for which an award will be generated.
There will be no payment for performance below the minimum level of performance.
 
   
Target Performance
  This is the expected, or budgeted, level of performance and the award paid for
target performance is the Target Award (TA).
 
   
Maximum
  This is the performance level for which the maximum award under the plan will
be paid. This is paid for a performance level at or above the maximum threshold.

VII.  AWARD CALCULATION

Attainment of the financial objectives of the Plan is measured based on actual
results versus Plan targets, with performance above or below Plan targets
prorated up/down to the maximum/minimum levels established for each financial
objective. The cost of the bonus payouts must be included in the results to be
measured.

VIII.  ALTERNATIVE CALCULATIONS

There may be circumstances under which the financial performance of the Company
does not generate an award under the Plan. The nature and scope of the Company’s
operations are such that at times unanticipated economic and market conditions
may render pre-established financial objectives unattainable in any given Plan
year. If, in the opinion of the Chief Executive Officer, such circumstances
should arise, an alternative bonus calculation may be performed.

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IX.  MODIFICATIONS

If, during a Plan year, there has occurred or should occur, in the opinion of
the Company’s Chief Executive Officer, a significant beneficial or adverse
change in economic conditions, the indicators of growth or recession in the
Company’s business segments, the nature of the operations of the Company, or
applicable laws, regulations or accounting practices, or other matters which
were not anticipated by the Company when it approved Corporate, and Division or
Group Objectives for the Plan year and which, in Management’s judgment, had or
have or are expected to have a positive or negative effect on the Company, the
Chief Executive Officer may modify or revise the Objectives for the Plan year in
such manner as he deems appropriate in his sole judgment. By way of
illustration, and not limitation, such significant changes might result from
sales of assets, or mergers, acquisitions, divestiture, or spin-offs.

Notwithstanding the above, the Plan is subject to suspension or termination at
any time (even if the financial objectives of the Plan have been achieved) by
the Chief Executive Officer of the Company, if, in his sole judgment, conditions
or circumstance exist or may exist that had, have or are expected to have a
negative effect on the Company.

X.  PAYMENT

It is anticipated that any Plan awards earned and declared will be paid in
February/March 2005.

Employees terminating prior to the date on which awards are paid are not
eligible for payment of any award under this Plan unless termination is due to
death or retirement. In such cases, any bonus payments will be prorated to the
date of termination and determined on the basis of bonuses actually paid to
similarly situated employees.

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Annual Incentive Plan Structure — Year 2004

                                      Group

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  Bonus as Percent of Base

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  Financial Objective Weighting

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    Min.

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  Target

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  Max.

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Corporate CEO
    60%       120%       180%           % EBIT and       % Working Capital
 
                                   

                            1.     Corporate employees based 100% on Corporate
results
 
                                   
Division Presidents
Corporate Sr. VP’s
    50%       95%       145%       2.     Division Presidents - Bonus is based
80% on Division results and 20% on Corporate results
 
                                   
Corporate VP’s
    40%       80%       120%       3.     All others based on Division results
or group results as determined by Division Presidents
 
                                   

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FORM OF AWARD LETTER

                    , 200    

     
Re:
  Variable Compensation Plan Award

Dear Weatherford Employee:

We are pleased to advise you that your award under the Weatherford Variable
Compensation Plan for 2004 will be $                    . Thank you for your
hard work and efforts during 2004 on Weatherford’s behalf.

Sincerely,

Weatherford International Ltd.

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