Weatherford International plc WFT has divested U.S. oil-well business to a subsidiary of Schlumberger NV 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 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.
By: Zacks Equity Research.
Photo: Smart Stock News.
Review: Emerging Market Formulations & Research Unit, Flagship Records.