Shares of Weatherford International (WFT) slid 2.7% in early morning trading Thursday to $5.40 as investors reacted negatively to its second equity offering of the year.

While the share issuance will dilute stockholders by 17.7%, the proceeds will be used to pay down around $1 billion in debt, which will go a long way toward easing liquidity concerns about the Switzerland-domiciled oilfield services giant, analysts say.

"Despite our shared sense of frustration, when [the] dust settles, [the] big-picture point is that this now removes liquidity overhang," Tudor, Pickering, Holt & Co. Securities wrote in a report Thursday.

Weatherford plans to pay down via tender process its $1.1 billion of existing senior notes with a 2017 to 2018 maturity with proceeds from the convertible issuance. The new notes have a 5.875% coupon, 40% exchange premium and a $7.74 exchange price per share due 2021. Weatherford previously did a straight equity offering in March that raised $630 million.

Analysts at Seaport Global Securities say the offering could cut Weatherford's debt by 16.8% if the exchangeable notes are converted to equity, could save $5.6 million in interest in 2017 and 2018 and could be less dilutive than issuing equity. But they note that Weatherford's shares could be under pressure in the near term from convertible arbitrage trading. "We view any unusual pressure as a buying opportunity," they said.

Seaport has a buy rating on the stock with a $7 price target.

Seaport noted that there are some "happy bankers out there," with Weatherford estimating fees and expenses related to the transaction of $30 million if the underwriters exercise their overallotment.

RBC Capital Markets, Citigroup, Deutsche Bank Securities , J.P. Morgan, Morgan Stanley, MUFG and Wells Fargo are joint book-running managers for the offering and RBC Capital Markets is the structuring adviser.

Bill Herbert, head of global energy research at Piper Jaffray unit Simmons & Co. International, said in a report he supports the transaction as it materially improves the financial resilience of the company. "[It] allows management to more fully concentrate on running/improving the operational business as opposed to repeatedly being enveloped, with increasing frequency, by serial crises," he said.

Herbert has a neutral rating on the stock with a price target of $7.20.

Weatherford has struggled with its $7 billion debt load given the downturn in the oil and gas industry. Last month Moody's Investors Service and Fitch Ratings downgraded Weatherford's debt over worries of a possible default and refinancing risks.