This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Weatherford Dumps Ballast: Should You Buy Now?

Stocks in this article: WFTSLBHALRIG

NEW YORK (TheStreet) -- Weatherford International (WFT) shares have done pretty well, rising 40% so far this year. That's better than the S&P 500's 27% gain, and better than most of Weatherford's peers in the oil-service business.

But the company built by Bernard Duroc-Danner is not out of the financial woods. It has more than $1 in debt for each $3 in assets, its cash position is poor and its profit margin hovers around zero.

The shares are rising because earlier this month it announced a divestiture plan aimed at reducing debt by $3 billion to $5 billion by the end of 2015. Also, this week the company settled foreign bribery charges, deferring two prosecutions and settling a civil case for $253 million. The company last year had earmarked $100 million to settle some charges.

The sales should cut Weatherford's debt by about half. The fines would nearly wipe out a cash position that stood at $316 million at the end of September.

[Read: How to Profit From Nuance's Crash]

Weatherford operates out of Houston, but it's technically based in Switzerland, having moved there in 2009 when Transocean (RIG) was also moving to Switzerland and Halliburton (HAL) was creating a joint headquarters in Dubai.

At the time there was great fear in the oil patch that the incoming Obama administration would be bad for the oil-service business. In fact, the U.S. oil business has boomed since that time, and this country is on track to become self-sufficient in oil.

The charges alleged by the government include bribery of Middle Eastern and African officials, including abuse of the United Nations' oil-for-food program, with lax controls that included falsified records. Duroc-Danner said after the settlement was announced this week that the charges are now behind the company.

I slammed Duroc-Danner's record one year ago, after the stock fell from a high of more than $25 to a 2012 low of less than $10. It reported $500 in tax errors during 2011, which it called an "honest mistake," then got a new chief financial officer.

[Read: Time to Consider Tesla, Warts and All]

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,827.75 +12.81 0.07%
S&P 500 2,072.83 +5.80 0.28%
NASDAQ 4,787.3170 +29.0650 0.61%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs