Weatherford International plc made it official on Monday as it filed for voluntary bankruptcy protection to wipe billions of debt from its bottom line.
The nation’s fourth largest oilfield services provider, whose principal operations are based in Houston, in May executed a restructuring support agreement (RSA) with a group of its senior noteholders to prepare for a prepackaged Chapter 11 filing.
Weatherford has struggled to reconcile debt and recover from the wipeout in oil prices in 2014 that damaged value across the energy industry. The Swiss-based operator also has dealt with internal financial accounting miscues, which led to an executive turnover. The company now is led by CEO Mark McCollum, former CFO for Halliburton Co., who came aboard in 2017. Weatherford has failed to make a profit since 3Q2014. McCollum has promised a “new chapter” but the overhaul has taken longer than the management team may have anticipated.
Citing plans to advance its technology wizardry, Weatherford has set its capital expenditure plan higher this year at $200-250 million from $190 million in 2018.
Weatherford posted a loss in 1Q2019 of $481 million (minus 48 cents/share), from a year-ago loss of $245 million (minus 25 cents), while revenue slumped 5.4% to $1.35 billion.
According to the Chapter 11 filing, Weatherford is carrying up to $10 billion in liabilities, including $7.5 billion in unsecured bond debt. The company said it could not determine the value of the debt from its largest creditors, but it said nearly 80% of the creditors are backing the RSA.
Under the plan, the Swiss-based company is seeking to shed $5.8 billion of the $7.6 billion in long-term debt in exchange for 99% of the stock in the reorganized company. The agreement also would provide $1.75 billion in new credit and loans.