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How the Market Viewed Weatherford International on May 12

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How the Market Viewed Weatherford International on May 12 PART 1 OF 4

How Much Did Weatherford Drop in the Year before May 12, 2017?

Weatherford’s stock price with respect to the industry

In the past year, Weatherford International’s (WFT) stock has fallen 11% through May 12, 2017. In the past year, WFT has also underperformed the VanEck Vectors Oil Services ETF (OIH), which has generated 2% returns. OIH is an ETF tracking an index of 25 oilfield equipment and services (or OFS) companies.

The Energy Select Sector SPDR ETF (XLE), the broader energy industry ETF, has produced 4% returns in the past one-year period. Weatherford International has sharply underperformed the SPDR S&P 500 ETF (SPY), which produced 17% returns during the same period. The Dow Jones Industrial Average (DJIA-INDEX) has increased 19% in the past one-year period. The energy sector makes up 6.2% of the DJIA-INDEX.

How Much Did Weatherford Drop in the Year before May 12, 2017?

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Crude oil prices

In the past one-year period, the West Texas Intermediate (or WTI) crude oil price has recovered 4%. The hike in crude oil prices partially explains OIH’s returns. You can read more about crude oil price dynamics in Market Realist’s A key investor’s guide to the crude oil market.

Weatherford forms alliance with Schlumberger and Nabors

On March 24, 2017, Schlumberger (SLB) and Weatherford International (WFT) announced that they would form a joint venture (or JV) named OneStimSM. You can read more about this and the latest updates on SLB in What to Expect from Schlumberger Stock after JV with Weatherford.

Weatherford has also agreed to form an alliance with Nabors Industries (NBR). For more information on this event, please read Nabors’ Alliance with Weatherford: How Did the Market Respond?

The factors that can drive Weatherford International going forward include:

  • WFT received a contract in Western Canada for more than 40 pumping units for an upstream operator.
  • Weatherford International received a 30-month contract to provide integrated services in shallow-water Mexico. The contract is valued at $178 million.
  • In the Middle East, WFT’s contracts with two large national oil companies have been extended through 2018. You can learn more about WFT in Weatherford International’s 1Q17 Earnings Beat Estimates.

In the next article, we’ll explore what WFT’s implied volatility suggests for its stock price.

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