Weatherford Divests Pipeline and Specialty Services Business - Analyst Blog

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Leading oilfield services company, Weatherford International plc ( WFT ) announced the divestment of its pipeline and specialty services business to Baker Hughes Incorporated ( BHI ). The sale is part of Weatherford's previously announced plan to divest its non-core businesses.

The divestiture has added $241 million in cash to the company's kitty and $9 million in retained working capital. Weatherford International would mainly use the proceeds from the transaction to pay down outstanding debt.

Weatherford International is one of the world's leading providers of equipment and services used for the drilling, completion and production of oil and natural gas wells. The company conducts operations in numerous countries and has service and sales locations in almost all oil and natural gas producing regions in the world. Its products and services are divided into the following four principal operating divisions: Drilling and Intervention Services; Completion Systems; Artificial Lift Systems; and Compression Services.

With respect to the second half of 2014, the company expects growth in its North American, Latin American, North Sea, Sub-Sahara Africa and the Middle Eastern areas. Overall, the company expects margins to improve in 2014 with lower costs and growth in more profitable core businesses. The company expects adjusted earnings per share to range between $1.10 and $1.20.

We remain optimistic on Weatherford International's operational and financial leverage to overseas growth in 2014. But the company's debt-heavy balance sheet, weak free cash flow as well as competition from larger peers are causes of concern.

Weatherford currently carries a Zacks Rank #2 (Buy). Investors can also consider oil and gas stocks such as WPX Energy, Inc. ( WPX ) and Sunoco Logistics Partners L.P ( SXL ), both sporting a Zacks Rank #1 (Strong Buy).


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: BHI , WFT , SXL , WPX

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