Weatherford (WFT) Divests US Oil-Well Unit To Schlumberger

Weatherford International plc (NYSE:WFT) has divested U.S. oil-well business to a subsidiary of Schlumberger NV (NYSE:SLB) for $430 million in cash, scrapping plan of a joint venture.

In March 2017, Weatherford decided to put its North American pressure pumping and well completions operations into a venture with Schlumberger for $535 million in cash and a 30% stake in the new business — OneStim. This was an attempt to be more competitive against market leader Halliburton Company (NYSE:HAL) and fast-emerging companies such as Keane Group Inc.

Weatherford will retain the entire leading multistage completions portfolio, manufacturing capability and supply chain and will continue to take part in the growing completions markets in Canada and the United States as well as globally.

Recently, the companies abandoned the joint venture. This was mainly because Weatherford sold U.S. pressure pumping assets to Schlumberger and transferred about 100 employees.

Due to the growing demand from shale producers, pressure pumping specialists have been benefiting from higher crude prices. In December, Keane Group announced a $115-million investment to expand fleet, owing to high demand and improving economics.

The funds raised from the transaction will be used by Weatherford to start deleveraging balance sheet, which reflects a debt of about $7.9 billion. Due to huge losses, the company has been selling assets. In the first nine months of this year, Weatherford incurred a loss of $875 million on revenues of $4.21 billion.

Price Performance

Shares of Weatherford have gained 4.3% compared with the industry’s rally of 0.9% in the last six months.

Zacks Rank & Key Picks

Weatherford carries a Zacks Rank #3 (Hold). A better-ranked player in the energy sector is Holly Energy Partners, LP (NYSE:HEP) , which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Holly Energy Partners, owner and operator of refined product pipelines and terminals, delivered an average positive earnings surprise of 57.14% over the trailing four quarters.

Zacks Editor-in-Chief Goes "All In" on This Stock

Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.

Download it free >>