Weatherford International plc, the No. 4 oilfield services (OFS) operator in the world, on Monday agreed to sell its surface data logging business for $50 million, just days after it was notified it could be delisted from the New York Stock Exchange (NYSE).
As part of the agreement with UK-based Excellence Logging, the Swiss-based OFS giant is selling all of its surface data logging equipment, technology and associated contracts. Related personnel would also be able to transfer to the new owner.
Weatherford is exiting the surface data logging business, but it plans to maintain a “close and collaborative relationship” with Excellence Logging to provide bundled and integrated services to customers.
The transaction, set to be completed in the first half of 2019, is designed to maximize Weatherford’s shareholder value “by refocusing the company’s portfolio on the businesses most closely aligned with its long-term strategy.” Net proceeds would be used to reduce debt.
Excellence Logging “shares our mindset and commitment to providing the highest level of service to our customers,” Weatherford CEO Mark A. McCollum said. “The similarities in approach, culture and experience will help ensure a smooth transition for our customers and our employees who will be joining Excellence Logging.”
“With the purchase, Excellence Logging would become the largest independent mud logging operator in the oil and gas services sector,” CEO Bruno Burban said. “Our singular dedication to innovation and the strength of our people-driven organization provide the clear focus on our business that drives our performance.
“The scale of Weatherford’s mud logging operations, long history in this business, and experienced personnel will complement our own to give us a truly global presence.”
The transaction is one in a series of planned divestitures to help deleverage Weatherford’s capital structure.
During the third quarter, Weatherford agreed to sell its international land rigs business for $287.5 million, of which it has received $215.5 million in proceeds to date. Since the start of the fourth quarter, it has agreed to sell its laboratory services business for $205 million.
Improving Weatherford’s fortunes, which were buffeted by the 2014 downturn along with missteps by the previous management team, is a priority for McCollum, the former financial chief of Halliburton Co.
McCollum came aboard last year and launched a company-wide overhaul. He also vowed to sell off unprofitable businesses. Still, the share price has fallen as the company has failed to deliver.
Net losses in 3Q2018 totaled $199 million (minus 20 cents/share), versus a year-ago loss of $256 million (minus 26 cents). Revenue was flat sequentially and down 1% from a year ago, at $1.44 billion.
Last week, Weatherford was given six months to increase its share price or face a delisting from the NYSE after falling below $1.00/share over 30 consecutive trading days. The company at midday Monday was trading for about 44 cents/share. Management said it intended to “cure” the deficiency and regain compliance.
“The company intends to regain compliance by completing its previously announced company-wide transformation plan,” which is designed to improve its run-rate by an incremental $1 billion by the end of 2019, management said. “The company may also explore other available options, including a reverse stock split, if appropriate.”
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