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Is Weatherford (WFT) About to Divest a Major Business Unit?

Zacks Equity Research
Updated

Weatherford International plc WFT might be considering the divestment of a major business unit for repaying its significant debt load, according to Mark McCollum — the chief executive officer (CEO) of the firm.  

The three-year crude downturn severely affected Weatherford. Following this impact, the company reported loss per share for three years in a row since 2015. Through first-quarter 2018, the company also failed to report per share profit.

In addition, Weatherford’s balance sheet has been getting weaker with a surging debt load. As of Mar 31, 2018, the company’s long-term debt stands at $7.6 billion. Hence, to support operations and strengthen balance sheet, Weatherford is relying on asset divestments, which is part of its business restructurings. The company made a major move on Dec 29, 2017, when it divested its hydraulic fracturing unit in the United States, for a cash consideration of $430 million, to Schlumberger Limited SLB.

McCollum did not point out the assets the firm is intending to sale and added that his moves will directly benefit the shareholders. Weatherford is also working toward divesting its four smaller business units through 2018, which, together, will likely fetch the company $500 million.

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Headquartered at Baar, Switzerland, Weatherford is the leading provider of oilfield services to customers belonging to the energy space.

The pricing chart of Weatherford is not impressive. The company’s shares have plunged 34.9% over the past year, underperforming the industry’s 6.8% gain.

Currently, the stock carries a Zacks Rank #3 (Hold), implying that it will perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, two better-ranked players in the energy sector are BP plc BP and WildHorse Resource Development Corporation WRD. Both stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

BP managed to beat the Zacks Consensus Estimate in three of the last four quarters.

WildHorse is expected to see year-over-year earnings growth of 288.4% in 2018.

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Weatherford International PLC (WFT) : Free Stock Analysis Report
 
Schlumberger Limited (SLB) : Free Stock Analysis Report
 
BP p.l.c. (BP) : Free Stock Analysis Report
 
Wildhorse Resource Development Corporation (WRD) : Free Stock Analysis Report
 
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