U.S. oilfield services company Weatherford International Plc on Dec. 29 sold a U.S. oil-well business to rival Schlumberger NV for $430 million, abandoning a planned joint venture.
Weatherford has struggled with losses and has been looking to sell units and raise cash to reduce about $7.9 billion in debt. It suffered a $875 million loss on $4.21 billion in revenue for the first nine months of this year.
In March, the company agreed to put its North American pressure pumping and well completions operations into a venture with Schlumberger in exchange for $535 million in cash and a 30% stake in the resulting business, called OneStim. The effort was designed to better compete against market leader Halliburton and fast-growing companies such as Keane Group.
On Dec. 29, the joint venture was abruptly called off as Weatherford sold its U.S. pressure pumping assets used to hydraulically fracture shale rock to release trapped oil and gas, and transferred about 100 employees to Schlumberger.
The new deal "delivers cash proceeds that enable our company to begin the deleveraging process," Weatherford Chief Executive Mark McCollum said in a statement. Keeping the U.S. and Canadian well-completions operation "allows for significant upside potential," he added.
Pressure pumping specialists have been expanding rapidly with strong demand from shale producers taking advantage of higher crude prices. This month, Keane Group Inc. said it would spend $115 million to expand its fleet, citing higher demand and improved economics.
RBC Capital Markets analyst Kurt Hallead in a research note said the deal doubles Schlumberger's hydraulic fracturing fleet and allows it to avoid a potential payout to acquire the rest of OneStim. Weatherford gets most of the cash it would have received under the original agreement, but gives up recurring income from the joint venture, he wrote.
Representatives of Weatherford and Schlumberger did not reply to requests for comment.
Recommended Reading
Tellurian Reports Driftwood LNG Progress Amid Low NatGas Production
2024-05-02 - Tellurian’s Driftwood LNG received an extension through 2029 with authorization from the Federal Energy Regulatory Commission and the U.S. Army Corps of Engineers.
Zeta Energy Appoints Michael Everett as COO
2024-05-02 - Prior to joining Zeta Energy, a lithium-sulfur battery developer, Michael Everett previously served as president and COO at Advanced Battery Concepts.
Shell Launches $3.5 Billion Share Buyback Program
2024-05-02 - Shell, which posted first-quarter adjusted earnings of $7.7 billion, will cancel all of the shares it buys.
Supply Disruptions Ahead as Canadian Rail Workers Vote for Strike
2024-05-01 - The union, representing more than 9,000 employees at Canadian National Railway and Canadian Pacific Kansas City, announced that 95% of its members approved of a strike, which could happen as early as May 22.
Patterson-UTI Braces for Activity ‘Pause’ After E&P Consolidations
2024-02-19 - Patterson-UTI saw net income rebound from 2022 and CEO Andy Hendricks says the company is well positioned following a wave of E&P consolidations that may slow activity.