The world’s fourth-largest oilfield services provider, Weatherford International, said that it had started a financial restructuring by filing for Chapter 11 bankruptcy protection in the U.S. in a bid to reduce its long-term debt of more than US$7 billion.
Weatherford also expects to file for bankruptcy protection in Ireland and Bermuda in the coming months.
“The comprehensive financial restructuring would significantly reduce the Company’s long-term debt and related interest costs, provide access to additional financing and establish a more sustainable capital structure,” Weatherford said in a statement this week, following up on a press release from May that it had reached a deal with senior note holders about a financial restructuring aimed at significantly reducing long-term debt. The company expected the restructuring agreement to be implemented under a ‘pre-packaged’ Chapter 11 process that would reduce its long-term debt by more than US$5.8 billion.
On May 13, the New York Stock Exchange NYSE suspended trading in Weatherford’s ordinary shares and said it intends to begin proceedings to delist the shares because they are no longer suitable for listing due to “abnormally low” price levels. Weatherford said at the time that it planned to appeal that decision.
The financial struggles of one of the top drilling and well-completion services providers in the world after Schlumberger, Halliburton, and Baker Hughes, come at a time when U.S. shale production is booming and the Permian continues to set new production records.
The shale production boom, however, hasn’t been so kind to all players in the U.S. oil patch. Under debt burdens, some smaller companies have opted for Chapter 11 proceedings to clean up their balance sheets.
Oilfield services companies, which had just emerged in 2018 from the 2014-2015 oil price collapse, are again feeling the pain with the slowdown in shale drilling activity as oil prices dropped in Q4 2018.
By Tsvetana Paraskova for Oilprice.com