NEW YORK (TheStreet) -- Shares of Weatherford (WFT) were falling 14% to $4.14 on heavy trading volume mid-Tuesday afternoon after Wolfe Research noted that the company's tight debt convenants could require it to issue equity.
Weatherford has since stated that it will meet all debt convenants at the end of the year.
"The relative tightness that we are currently experiencing on the specified senior leverage and letters of credit ratio is expected to be alleviated by improving EBITDA and a declining balance of letters of credit," the Swiss oil and gas company said in a statement. "Additionally, given our growing order book, increasing tender flow and the recovering levels of customer activity, we expect to continue to meet all applicable revolving and term loan revolving and credit facility covenants through the remainder of 2017."
Piper Jeffray believes that Weatherford's statement should lend "considerable" support to the stock, TheFly reports.
The firm notes that a specified senior leverage ratio of 1.94x vs. a maximum ratio of 3.00x and a specified asset coverage ratio of 12.7x vs. a minimum ratio of 4.0x are the most important convenants.
About 107.61 million shares of Weatherford have been traded so far today, well above the company's average trading volume of roughly 23.59 million shares per day.
Separately, TheStreet Ratings team rates the stock as a "sell" with a ratings score of D.
Weatherford's weaknesses include its deteriorating net income, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
You can view the full analysis from the report here: WFT
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.