Whats next for Weatherford? There are far more questions than answers…

With the announcement of long term CEO Dr. Bernard Duroc-Danner leaving his positions with Weatherford, the market reacted quite positively with shares surging up (~33%) which were pretty stagnant for quite few days.

Lets not ignore the fact that for #WFT (ranked as #4 in OFS), the situation is getting out of hands due to

  1. Industry wide recession,
  2. Piling financial challenges, along with
  3. Recent penalty settlement of USD $140 million due to deceptive tax accounting practice between 2007 – 2010.

This firm has witnessed its shares tumbling down since July of 2014 with highest recorded at that time was $24ps.

This brings us to a rational question of “What will be next for #WFT?”

Krishna Shivram, current CFO, has been given the harness as interim CEO by the owners. With the current scenario, it would be interesting to see what leadership style Shivram would adopt to keep the company afloat.

Especially, when Q3 results showing negative EBITDA for NAM and quarterly EBITDA barely covering interest expenses. From a financial health perspective, WFT at this point needs to make some serious decisions in order to keep the company afloat without further diluting it’s current shareholder value.

Predicting Leadership Style & Direction of the Company:

As an outsider and focusing on the leadership style, following observation and expectation can safely made to predict the direction the company can potentially take.

Shivram, with strong career in finance, auditing, and exposure to M&A, will remain an asset for the company. Strong with numbers would undoubtedly lean him towards Lean Management Style with major decisions taken based on financial history.

His first priority will be to make books look better, neater, and cleaner. Shredding clunky business segments, restructuring, channeling positive cash flow and raising capital for the short term and mid term horizon would be next to follow. New debts will not be an option but will be a real challenge. It would be really interesting to see what measures #WFT would take to regain shareholder trust without further diluting their ROI?

Hopefully, by the end of current Oil Field crisis, with lean management style, there would be two major milestone which #WFT is expected to address:

1) Survival &

2) Strong Platform for Revival.

Real Challenges or potential pit falls:

Few to name would be…

  • Commitment of new top management.
  • New CEO to build right team with “Real Forward Looking Strategies”.
  • Transparency with shareholders and stakeholders. At this critical stage, skewed flow of information will be detrimental for everyone.
  • To place a cap on the extent and execution of lean management.
  • Relying purely on historical data for decision makings, while ignoring the present, and trust in human capacity.
  • Mindset of treating employees as a cost rather as an asset.
  • Adhering mindset of financial driven company rather technology driven company.
  • Building an adhoc, self sustaining, and empowering culture across #WFT.

Final Outcome:

Based on different scenarios, there are potentially three out comes, best to worst, based on who you are and what you are looking for from #WFT.

  1. Reshaping and repositioning the company in minimum amount of time by leaping forward to acquire top 3 position in the industry or creating niche and diversify the core business itself.
  2. Rejuvenating the company to either move to scenario 1 or be attractive for M&A.
  3. Going behind the cloak i.e. un listing from the stock market and then going up the ladder.

Final Words:

At this point, next few months would be very crucial reveling the direction which #WFT management would be taking.

So whatever the future is keeping, I wish well for my fellow colleagues of the oil field and wish them the best for days to come.

Thank you for your time.

This article was first posted here

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Disclosure:

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with (any) company who is mentioned in this article.

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