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Inside Weatherford's JV with Schlumberger

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Inside Weatherford's JV with Schlumberger PART 1 OF 3

Will Weatherford’s Alliance with Schlumberger Improve Returns?

Weatherford’s alliance with Schlumberger

On March 24, 2017, Schlumberger (SLB), the largest OFS (oilfield equipment and services) company, and Weatherford International (WFT) announced that they had inked an agreement to form a JV (joint venture). Schlumberger will own 70% of the JV, while WFT will own 30%.

You can read more about this JV in Market Realist’s What to Expect from Schlumberger Stock after JV with Weatherford.

Will Weatherford&#8217;s Alliance with Schlumberger Improve Returns?

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On February 1, Weatherford has agreed to form an alliance with Nabors Industries (NBR). See Market Realist’s Nabors’ Alliance with Weatherford: How Did the Market Respond? for more.

Weatherford’s stock price compared to industry

In the past year, Weatherford International’s (WFT) stock has fallen 21% (as of March 24, 2017). During that period, WFT has underperformed the VanEck Vectors Oil Services ETF (OIH), an ETF tracking an index of 25 OFS companies that has returned ~13%.

The Energy Select Sector SPDR ETF (XLE), the broader energy industry ETF, has returned 11% in the past year. WFT has also underperformed the SPDR S&P 500 ETF (SPY), which his risen 15% during the same period, while the Dow Jones Industrial Average (DJIA-INDEX) has risen 17%.

Crude oil price movement

In the past year, the price of WTI (West Texas Intermediate) crude oil has recovered 22%. However, since the beginning of March, crude prices have been showing weakness again. For the latest on crude oil prices, see Market Realist’s The Downturn in Oil: Is It Here to Stay?

Notably, the following factors could drive Weatherford in the future:

  • Weatherford won a one-year extendable contract in the Gulf of Mexico.
  • In the North Sea, WFT won a three-year contract for integrated services on a drilling rig.
  • WFT has a three-year coiled-tubing services contract for a national oil company in the Middle East.

You can learn more about WFT in Market Realist’s Will Weatherford’s Debt Repayment Plan Include Asset Sales?

Continue reading below for a look at WFT’s implied volatility.

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