Weatherford scraps JV, Sells Biz to Schlumberger
U.S. oilfield services company Weatherford International Plc on Friday 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 percent 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 Friday, 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.
Weatherford shares closed up 13 cents to $4.17 on Friday. They are off about 36 percent since March, when the joint venture was first proposed. Schlumberger was off 7 cents at $67.39.
(Reporting by Gary McWilliams; Editing by Leslie Adler)
