Bondholders are now calling the shots at Weatherford International, a company once considered the fourth-largest oil field service company in the world, now that it has emerged from Chapter 11 bankruptcy.
Weatherford completed its reorganization Friday, shedding about $6 billion in debt and moving forward with roughly $10 billion of financial support from a consortium of bondholders. Under a bankruptcy plan supported by 80 percent of the company’s creditors, those bondholders will hold more than 94 percent control of the company. An additional 5 percent of the company’s stock will be reserved as incentives for executives, while the remaining 1 percent will be used for current shareholders, who will be issued warrants for new shares.
Weatherford, which filed for Chapter 11 in July, is emerging from bankruptcy during a difficult period for oil field services. Oil prices for much of the year have been stuck in the $50-$65-per-barrel range, which is slightly below the break-even price for many producers in the Permian Basin of West Texas, Eagle Ford shale of South Texas and other U.S. shale plays. Oil and gas companies, in turn, have cut back and demanded lower prices from services companies, which have cut crews and spending and stacked equipment.
Shares of Weatherford, once a company worth billions of dollars, are trading at about 2 cents on the OTC Markets under the stock ticker symbol WFTIQ. The company’s stock rose Monday; Weatherford said it expects to return to the New York Stock Exchange, from which it was delisted in May.
“This is a notable day for Weatherford, as we have emerged as a stronger, more focused organization,” company CEO Mark McCollum said in a statement. “With renewed balance sheet strength, a strong customer base and a portfolio designed to meet the needs of our industry, we believe we are well-positioned to build on our reputation as a leader in the oil field services sector and to capitalize on the growth opportunities ahead.”
With roots in Texas going back to 1941, Weatherford grew to become the nation’s fourth-largest oil field services company by the early 2000s, but it racked up $10 billion in debt along the way.
While headquartered in Switzerland, Weatherford has its principal offices in Houston. Weatherford, which was already losing money, was hit hard by a July 2014 drop in crude oil prices. The company has not made a profit since the third quarter of 2014.
Bondholders have changed the company’s board of directors. Thomas Bates, a former Weatherford CEO with executive experience at rival oil field service companies Schlumberger and Baker Hughes, will serve as chairman. Bates will be supported by McCollum as well as former Lufkin Industries CEO John Glick, Sage Capital CEO Neal Goldman, Archrock board chairman Gordon Hall, former BP executive Jacqueline Mutschler and former Cameron International executive Charles Sledge.
This article first appeared on the Houston Chronicle – an Energy Voice content partner. For more from the Houston Chronicle click here.