Weatherford International PLC has agreed to sell its land rig operations in Russia and Venezuela to Russia's state-controlled oil giant Rosneft for $500 million in cash, as the oil-field services company continues to slim down and focus on its core businesses.
The Russian rig operations include 61 land drilling crews and a fleet of workover rigs, while the Venezuela operations include six land drilling rigs, Weatherford said Monday, adding the rig operations generate roughly half of the company's total existing revenue in Russia and about one-third of the company's business in Venezuela.
The remaining balance consists of the company's core product lines, which have in both markets produced good margins and strong capital attributes consistently over time, the company said.
The sale is expected to close in the third quarter, the company said.
Weatherford, which has benefited from the oil and gas boom in North America, has been pressured by slow international growth and one-time charges. The company has been focusing more closely on its core operations and improving its balance sheet.
In February, it said it would divest itself of noncore businesses, including pipeline and specialty services, testing and production services, drilling fluids and well heads. Weatherford also said then that the spinoff of its land drilling rig business is expected to take place in the fourth quarter of 2014 or first quarter of 2015, with cash proceeds expected to be used to pay down debt.
In March, Weatherford agreed to sell its pipeline and specialty services business to fellow oil-field services company Baker Hughes Inc. for $250 million.
"After the recent divestment of our pipeline business, this sale is the second step in our efforts to divest our non-core businesses," Chief Executive Bernard J. Duroc-Danner said Monday, adding that there will be additional steps taken in coming quarters.
(Wall Street Journal, July 14, 2014)
