Weatherford (WFT) Plans To Divest Assets To Ease Debt Load

Per Reuters, Weatherford International (NYSE:WFT) has appointed advisors, including Morgan Stanley (NYSE:MS), to ease the high debt burden of $7.9 billion by disposing some units. The asset divestment will begin in the first quarter of 2018.

The assets to be sold off include the company’s drilling tools and wellheads units, the international pressure pumping business and the artificial lift business. Some of the potential bidders for the pressure pumping assets will include domestic company Superior Energy Services and Canada’s Calfrac Well Services, as well as energy funds backed by private equity firms.

Per another source, oilfield services firms functioning in the Middle East and North Africa — core areas of Weatherford’s operations — can also be potential bidders.

In 2016, Weatherford put up its land drilling business for sale at an estimated cost of below $1 billion but failed to strike a deal. Currently, the company plans to sell the business in parts based on regional operations.

Though oil prices have touched pre-2014 levels, Weatherford projects about $500 million in additional proceeds from assets divested over the next one year.

With crude prices down from June 2014 levels, most drillers have significantly curbed their capital expenditures. This is expected to hamper Weatherford’s business to assist the drilling firms in setting up oil wells. As a result, the company has also resorted to downsizing. Analysts expect consolidation in the oilfield services industry to continue.

In March 2017, Weatherford and Schlumberger Ltd (NYSE:SLB) inked an agreement to form a joint venture aiming at North America’s unconventional resource development. Weatherford considers the transaction to deleverage balance sheet, while it can receive considerable exposure to the unconventional market.

Price Performance

Shares of the company have declined 11% against the industry’s rally of 6.8% in the last three months.

Zacks Rank

Weatherford currently carries a Zacks Rank #3 (Hold). A few better-ranked players in the energy sector include ConocoPhillips (NYSE:COP) and Northern Oil and Gas Inc (NYSE:NOG) . Both these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

ConocoPhillips, based in Houston, TX, is a major global exploration and production (E&P) company. It delivered an average positive earnings surprise of 152.34% in the last four quarters.

Northern Oil and Gas, based in Minnetonka, MN, is an independent energy company. The company delivered an average earnings surprise of 175.00% in the last four quarters.

Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

See This Ticker Free >>