Switzerland-based Weatherford International Ltd. (WFT) procured an amount of $750 million following the closure of the previously announced sale of the company’s engineered chemistry and Integrity drilling fluids businesses to an affiliate of The Lubrizol Corporation, a Berkshire Hathaway company.
The transaction is, however, subject to a customary post-closing working capital adjustment. During the twelve month period after the closing date, Weatherford is also expected to get a potential increase of $75 million from an earnout tied to the post-closing performance of the disposed businesses. Cash proceeds from the sale will be utilized to repay or repurchase debt.
Additionally, on Dec 23, 2014, Weatherford concluded the disposition of all of its shares of Proserv Group Inc. As announced earlier, affiliates of investor Riverstone Holdings LLC, in partnership with Proserv management acquired Proserv. Proceeds from this transaction were used by Weatherford to repay or repurchase debt.
The closure of these transactions forms a part of the company’s strategy to monetize the company’s non-core businesses. In 2014, the company’s divestiture proceeds exceeded $1.7 billion, higher than the earlier stated divestment target of $1 billion. These proceeds will help Weatherford contain its debt level.
Weatherford is a leading oilfield services company. It manufactures and provides equipment and services used in drilling, completion, and production of oil and natural gas wells. The company’s operations are divided into four separate geographies: North America, Latin America, Europe/West Africa/CIS, and Middle East/North Africa/Asia. It has manufacturing facilities and sales, service and distribution locations throughout the world. Weatherford provides a wide range of oilfield products and services.
Currently, Weatherford carries a Zacks Rank #4 (Sell). Investors could consider better-ranked stocks like Spectra Energy Partners, LP (SEP), Seadrill Partners LLC (SDLP) and QEP Midstream Partners, LP(QEPM), all of which sport a Zacks Rank #1 (Strong Buy).
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