Inside Weatherford’s Fall over the Past Year

In the past year, Weatherford International’s (WFT) stock has fallen 28% as of August 11, 2017. The VanEck Vectors Oil Services ETF (OIH) has returned -20% in the same period, while WTI (West Texas Intermediate) crude oil prices have risen 10%. (You can read more on the energy prices’ changing aspects in Your Crude Industry Highlights for Week 31.)

Despite the relatively steady price of crude oil, oilfield services peers Patterson-UTI Energy (PTEN) and Baker Hughes, a GE Company (BHGE), have seen their stock prices fall in 2017. Meanwhile, the US rig count has been on an uptrend, rising 97% in the past year as of August 11, 2017.

The Energy Select Sector SPDR ETF (XLE) has returned -7% since August 11, 2016, and Weatherford has vastly underperformed the SPDR S&P 500 ETF (SPY), which has returned 12% during the same period. The Dow Jones Industrial Average (DJIA-INDEX) has risen 18% in the past year. The energy sector makes up 5.9% of the DJIA-INDEX.

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

• higher revenues from US operations in 2Q17
• revenue growth in WFT’s Latin America operations
• the Middle East and Asia region contract ramp-ups
• the offshore energy market downturn in the Gulf of Mexico
• weaker product sales in the North Sea and in Russia

You can read more about WFT’s joint venture with Nabors Industries (NBR) in Market Realist’s series Nabors’ Alliance with Weatherford: How Did the Market Respond? Continue to the next part of this series for a look at what WFT’s implied volatility means for its stock price.