Weatherford International plc (NYSE: WFT) is having an overwhelmingly rough start to the investing year in today’s trading session, and for good reason. The company announced that, rather than continuing development in a project the company has spent massive amounts of money on, it has decided to divest. Today, we’ll talk about the story, what we’re seeing from WFT as a result, and what we’ll be watching for ahead.
WFT Falls On Divestment News
As mentioned above, Weatherford International is having an incredibly rough day in the market today after making a big announcement. The company said that it has divested its U.S. oil-well business to a subsidiary of Schlumberger NV SLB. According to the announcement, the company has received $430 million in cash as a result of the divestment and has scrapped the plan of working together on a joint venture.
The news comes following the agreement the two companyies signed back in March of 2017. Under the agreement, WFT sold a 30% stake and entered into a joint venture with Schlumberger in a deal valued at $535 million. The goal was to be a more competitive player in the market against the market leader (Halliburton Company) as well as quickly emerging companies within the sector. Nonetheless, the company has announced that it has divested and scrapped its plans in this area.
Moving forward, WFT will retain its entire multistage completions portfolio, manufacturing capability, and supply chain. The company will also continue to take part in growing completions markets in the United States, Canada, and around the world. Nonetheless, with a massive amount of debt, the company has been selling off assets in an attempt to get its balance sheet under control. Today’s announcement is one of the largest of these divestments made to date!
What We’re Seeing From The Stock
At the end of the day, we all know that the news moves the market. With Weatherford International slowly selling its business away for what many would consider a heck of a discount, investors are clearly concerned about the future, and that can be seen in the price of the stock today. Of course, our partners at Trade Ideas were the first to alert us to the declines. At the moment (1:10), WFT is trading at $3.48 per share after a loss of $0.69 per share (16.55%) thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on WFT. In particular, we’ll be watching closely to see what moves the company makes with the money generated from this divestment and watching where the company puts this money to work. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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