Weatherford International agrees to Chapter 11 bankruptcy

Posted at 1:19 PM, May 14, 2019
and last updated 2019-05-14 14:19:53-04

HOUSTON (AP) The struggling oilfield service company Weatherford International said Friday that it plans to file for Chapter 11 bankruptcy after more than four years without making a profit, the Associated Press reports.

In a late Friday afternoon filing with the U.S. Securities and Exchange Commission, Weatherford painted a dismal financial during the first quarter and a bleak outlook for the rest of the year.

The Swiss company, which has its principal operations in Houston, reported in the filing that it would seek to negotiate the refinancing and reorganization of the company with a majority of its senior creditors and then file for Chapter 11 bankruptcy. Weatherford has more than $7.6 billion in long-term debt.

Company officials warned stockholders that there is no guarantee that it will able to enter to the deal with its creditors before it files for bankruptcy.

“The success of any reorganization will depend on approval by the bankruptcy court and the willingness of existing debt and security holders to agree to the exchange or modification of their interests as outlined in the plan, and there can be no guarantee of success with respect to the plan or any other plan of reorganization,” the company wrote in its SEC filing.

Weatherford was originally supposed to release its first quarter earnings and host a conference call for investors early Wednesday morning. But the company abruptly canceled the investors calls on Tuesday and postponed the release of its first quarter results until Friday.

The company reported a $481 million loss in the first quater, widening from $242 million from the same period in 2018. Revenues slipped to $1.35 billion of revenue during the first quarter from $1.42 billion a year earliers

Among other factors, the company attributed the year-over-year declines to weak energy sector conditions in Canada, weather-related disruptions in the United States, Europe and Russia as well as project startup costs and an unfavorable impact from foreign exchange in Argentina.

Weatherford has not made a profit since the third quarter of 2014. With a bleak outlook for demand during the rest of 2019, the company reported that it is supplementing its operations with cash from investing and financing activities.

“These uncertainties have impacted our company in several ways, including the retention of our key personnel, access to debt and equity credit at suitable terms, our level of working capital and our ability to execute within our targeted timing on our transformation,” Weatherford officials wrote.

The first quarter results and SEC filing come less than two weeks after the company’s board of directors released a ballot asking stockholders to approve a reverse stock split plan to prevent the company from being delisted from the New York Stock Exchange.

Under the proposed 1-for-20 ratio, the roughly 1 billion outstanding shares of Weatherford stock would be reduced to just over 50 million shares — increasing the remaining stock’s value.

Weatherford’s stock has been trading below $1 per share since Nov. 13. New York Stock Exchange officials issued a delisting warning in December and gave Weatherford six months to improve its dismal stock performance. Weatherford’s stock closed at 37 cents a share Friday.

Founded in Texas, Weatherford is one of the largest oilfield service companies in the world. The global company had 67,000 employees at the beginning of 2014 but today, it employs around 26,500 people in 80 nations. The company has seven locations in Texas, including four in the Houston area.

The company posted a $2.8 billion loss on $5.7 billion of revenue in 2018. Under a transformation plan released in late 2017, the company has sold off its non-core assets and now focuses on drilling equipment and digital services.