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What We Learned about Weatherford on September 8

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What We Learned about Weatherford on September 8 PART 1 OF 3

Behind Weatherford’s Stock Fall over the Past Year

Weatherford’s stock price vis-à-vis industry and crude oil

In the past year, Weatherford International’s (WFT) stock has fallen 31% as of September 8, 2017. The VanEck Vectors Oil Services ETF (OIH) has returned -16% during this period, and so OIH has managed to outperform WFT. The price of WTI (West Texas Intermediate) crude oil price had risen 3% as of September 8, 2016.

Despite a relatively steady crude oil price, oilfield services peers Patterson-UTI Energy (PTEN) and Nabors Industries (NBR) have seen their stock prices fall in 2017. The US rig count has risen 86% in the past year as of September 8, 2017, but the US rig count has fallen over the past six weeks.Behind Weatherford’s Stock Fall over the Past Year

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The Energy Select Sector SPDR ETF (XLE) has returned -8% since September 8, 2016, and the SPDR S&P 500 ETF (SPY), which has returned 16%, has significantly outperformed Weatherford during the same period. The Dow Jones Industrial Average (DJIA-INDEX) has risen 21% in the past year.

The following factors affected WFT’s returns in 2Q17:

  • Latin America operation revenue growth
  • US operations’ improved revenues in 2Q17
  • the Gulf of Mexico’s offshore energy market downturn
  • lower product sales in the North Sea and Russia
  • contract build-ups the Middle East and Asia

Management change

On August 21, 2017, WFT appointed Karl Blanchard as executive vice president and COO (chief operating officer). Mr. Blanchard served in Halliburton (HAL) and Seventy Seven Energy before joining WFT.

In the next part, we’ll discuss what WFT’s implied volatility means for its stock price.

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