Nabors’ Alliance with Weatherford: How Did the Market Respond?
Nabors’ alliance with Weatherford
On February 1, Nabors Industries (NBR) made an alliance with Weatherford International (WFT) to deliver enhanced drilling solutions to the upstream energy industry in the US onshore. The two companies signed an MOU (Memorandum of Understanding). However, the MOU is non-binding.
Why did they form an alliance?
Under the MOU, Weatherford International’s expertise in well construction, MPD (managed pressure drilling) solutions, directional drilling hardware, and software application will combine with Nabors’ MPD compliant smart rigs. Nabors will also deploy its measurement-while-drilling solutions, automated rig equipment, and control systems. The combination of these capabilities is expected to result in improved operational performance, more accurate wellbore placement, and lower drilling costs.
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How did the market respond?
In the past year, Nabors’ stock price rose 150%. During this period, Weatherford International’s stock price fell 3%, while OIH’s price rose 46%. The West Texas Intermediate crude oil price recovered 67% in the past year. The SPDR S&P 500 ETF (SPY) rose 20% since February 2, 2016. The OFS industry saw a number of merger and acquisition activities in the past few months, including Baker Hughes’s (BHI) proposed deal for a partnership with GE’s (GE) oil and gas business. To learn more, read Realist’s GE to Partner with BHI? The Changing Oilfield Services Landscape.
In this series, we’ll look at Weatherford International and Nabors’ correlation with crude oil, short interest, and analysts’ recommendations. We’ll start with Nabors’ implied volatility.