Weatherford to chop more

Services company will shed two divisions and cut its workforce by another 3,000 jobs

Weatherford International said Thursday it plans to sell two of its major divisions and cut more jobs worldwide as the Houston oil field services company repositions itself as a smaller firm with a narrower focus.

Once the fourth of the socalled big four services companies, Weatherford has lost ground to its main rivals after an oil bust that battered the entire sector and internal missteps that added to the company’s woes. Executives said Thursday that the company will sell its U.S. hydraulic fracturing and Middle East rig drilling division and cut another 3,000 jobs.

By the time the job cuts are complete later this year, Weatherford will have gutted its workforce by nearly 60 percent since 2014.

“Weatherford will reinvent itself and thrive,” the company’s interim CEO, Krishna Shivram, vowed in a conference call with analysts.

Weatherford is still cutting as industry leaders Schlumberger and Halliburton stabilize, and the longtime No. 3 services provider, Baker Hughes of Houston, prepares to complete a merger with General Electric’s oil and gas division, which could vault it into the No. 2 spot ahead of Houston rival Halliburton.

Weatherford executives, in a conference call with analysts, said Thursday they’ve already cut 2,000 positions in the latest round of job cuts and will complete the remaining 1,000 layoffs before the end of the second quarter.

Weatherford was struggling even when oil was at $100 a barrel. After expanding perhaps too rapidly, the company began eliminating jobs before the bust.

The company also outpaced internal controls as it grew through acquisitions during better times. Weatherford agreed in September to pay a $140 million penalty to settle

federal charges that it used deceptive accounting practices to falsely inflate profits from 2007 to 2012.

In November, longtime Weatherford chairman and CEO Bernard Duroc-Danner abruptly resigned. Shivram, who joined the company as chief financial officer in 2013, was named interim chief.

“For Weatherford, being predictable and boring is a damn good thing,” Shivram said.

He said the company plans to sell the already idled pressure pumping business, which includes fracking, or combine it with another company. Weatherford has about 20 U.S. fracking crews. Next year, after making upgrades, Weatherford intends to sell its land drilling rigs business, including more than 100 rigs, based primarily in the Middle East and North Africa.

The goal is to bring in a combined $2 billion or so from the sales of the divisions. Weatherford’s fracturing business simply wasn’t able to distinguish itself from the top players, while its international drilling rig business was deemed nonessential after Weatherford built up its foreign customer base through other services.

Weatherford will focus instead on its proven pump jacks and other technologies to keep oil flowing from the ground, its well construction services and its completion tools businesses, as well as new integrated services partnerships with drillers like Nabors Industries, Shivram said.

Byron Pope, an energy analyst with Tudor, Pickering, Holt & Co. in Houston, said Weatherford can thrive as a smaller company focused on what it does best and not trying to do all things for all oil producers. He said the company appears near the end of its cuts.

“We believe the company is well-positioned going forward,” Pope said.

Weatherford will focus on cutting its debt reduction as its top priority, Shivram said. Weatherford’s net debt peaked at about $10 billion just before the oil bust and is now down to $6.5 billion. The company’s top goal is to get it below $3 billion by 2021, he said.

Weatherford lost $549 million in the fourth quarter, but that’s still an improvement from a $1.15 billion loss it posted for the final quarter of 2015, as well as a $1.78 billion loss in the third quarter of last year.

Weatherford’s revenue, however, jumped 4 percent from the third quarter, including 8 percent in North America.

The U.S. is positioned to rebound in a “more robust fashion” than the rest of the world, Shivram said.