Major oil field services player Weatherford International is still reeling on Wall Street after posting a big financial loss amid its new leadership’s efforts to scale back and right the ship.
Weatherford’s stock plunged nearly 14 percent Friday after reporting a $1.94 billion quarterly loss – a much larger loss than expected – and the stock continued to sink another 10 percent on Monday. It was trading early Monday afternoon at about $3.15 a share.
But energy analysts were hoping for more signs of optimism by now with oil prices rising and global oil and gas activity, especially in the U.S., starting to pick back up. Halliburton and industry leader Schlumberger posted stronger earnings with optimistic messages for 2018 and beyond.
“Weatherford maybe took multiple steps back,” said Byron Pope, an energy analyst with Tudor, Pickering, Holt & Co. “The magnitude of the disappointment – even assuming the business recovers – means it’s hard for us to get excited about the story here.”
Weatherford was considered part of the so-called “Big Four” energy services giants with Schlumberger, Halliburton and Baker Hughes, now a GE company.
“It’s really more like the big three at the point,” Pope said. “I don’t even think it’s fair to include Weatherford in that conversation anymore.”
McCollum on Friday preached though that investors won’t have to remain patient for too much longer. He has lofty goals for cost cutting and debt reduction in 2018 and into 2019.
“We set the stage for the future of Weatherford,” McCollum said. “We have made significant progress, taking decisive and strategic actions throughout 2017. In addition to realigning and flattening our structure, we initiated an organizational transformation plan that will create an estimated $1 billion in profit improvements over the next 18 to 24 months.”
Weatherford just sold its U.S. pressure pumping business, which includes its hydraulic fracturing crews, to Schlumberger for $430 million after initially planning to do a joint venture instead.
Also, Weatherford is on the verge of selling its international land rig business, which is largely based in the Middle East, in the coming weeks or months.
Weatherford posted financial losses in both the Western and Eastern hemispheres, but much of its quarterly loss came from $1.68 billion in asset write downs. That includes nearly $1 billion from the planned sale of its land rig business, $230 million from a big drop in business in economically suffering Venezuela, and most of the rest came from older equipment that was scrapped.
It’s nearly $1.5 billion in quarterly revenues were up 6 percent over the year prior, but its $5.7 billion in annual revenues fell 1 percent from 2016.
This first appeared on the Houston Chronicle – an Energy Voice content partner. For more click here.
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