Weatherford finally sells its Mideast land rig business
Financially struggling oil field services provider Weatherford International finally has found a buyer to acquire its Middle East onshore drilling rig business as part of its long-term divestiture plans.
Weatherford, which is based largely out of Houston, has aimed to sell the business since early 2017. ADES International Holding, a company in the United Arab Emirates, will buy the Weatherford unit for $287.5 million. ADES operates in the Middle East and northern Africa.
Weatherford recently sold its North American hydraulic fracturing business to industry leader Schlumberger, and unloading its land rig business was the next step in its downsizing effort to reduce its debt and stabilize the company financially.
Weatherford hired Mark McCollum as its CEO more than a year ago to turn things around. McCollum previously was the chief financial officer of the Houston oil field services company Halliburton.
The deal will double the size of ADES. It includes the sale of 31 land drilling rigs and related contracts, as well as the transfer of about 2,300 Weatherford employees and contractors.
This includes operations in Saudi Arabia, Kuwait, Iraq and Algeria. The sale is expected to close before year-end. Weatherford still has a few rigs remaining in the region that it will sell through smaller deals.
Weatherford was considered part of the Big Four energy services giants with Schlumberger, Halliburton and Baker Hughes. But the company has struggled for years, running into problems even before the 2014 oil bust that devastated the sector.
Weatherford, for instance, now holds a Wall Street value of about $3.5 billion, versus well more than $35 billion for Baker Hughes and Halliburton. Industry leader Schlumberger is valued at almost $95 billion.
Weatherford has shrunk to fewer than 29,000 workers worldwide from 67,000 in early 2014. This sale will bring the head count down to about 27,000.
Still, energy analysts saw the ADES sale as welcome news that eliminates a question mark that had been hovering over Weatherford.
James West, an analyst with Evercore ISI in New York, said the sale exceeds expectations somewhat because the anticipated sales price was closer to $250 million.
“Mark McCollum’s vision is finally starting to take shape, and we believe Weatherford may be hitting its stride on the path to becoming a sustainable, focused powerhouse within the industry,” West added.