• 2 hours UK Offers North Sea Oil Producers Tax Relief To Boost Investment
  • 4 hours Iraq Wants To Build Gas Pipeline To Kuwait In Blow To Shell
  • 6 hours Trader Trafigura Raises Share Of Oil Purchases From State Firms
  • 7 hours German Energy Group Uniper Rejects $9B Finnish Takeover Bid
  • 9 hours Total Could Lose Big If It Pulls Out Of South Pars Deal
  • 11 hours Dakota Watchdog Warns It Could Revoke Keystone XL Approval
  • 1 day Oil Prices Rise After API Reports Major Crude Draw
  • 1 day Citgo President And 5 VPs Arrested On Embezzlement Charges
  • 1 day Gazprom Speaks Out Against OPEC Production Cut Extension
  • 1 day Statoil Looks To Lighter Oil To Boost Profitability
  • 1 day Oil Billionaire Becomes Wind Energy’s Top Influencer
  • 1 day Transneft Warns Urals Oil Quality Reaching Critical Levels
  • 1 day Whitefish Energy Suspends Work In Puerto Rico
  • 1 day U.S. Authorities Arrest Two On Major Energy Corruption Scheme
  • 2 days Thanksgiving Gas Prices At 3-Year High
  • 2 days Iraq’s Giant Majnoon Oilfield Attracts Attention Of Supermajors
  • 2 days South Iraq Oil Exports Close To Record High To Offset Kirkuk Drop
  • 2 days Iraqi Forces Find Mass Graves In Oil Wells Near Kirkuk
  • 2 days Chevron Joint Venture Signs $1.7B Oil, Gas Deal In Nigeria
  • 2 days Iraq Steps In To Offset Falling Venezuela Oil Production
  • 2 days ConocoPhillips Sets Price Ceiling For New Projects
  • 5 days Shell Oil Trading Head Steps Down After 29 Years
  • 5 days Higher Oil Prices Reduce North American Oil Bankruptcies
  • 5 days Statoil To Boost Exploration Drilling Offshore Norway In 2018
  • 5 days $1.6 Billion Canadian-US Hydropower Project Approved
  • 5 days Venezuela Officially In Default
  • 5 days Iran Prepares To Export LNG To Boost Trade Relations
  • 5 days Keystone Pipeline Leaks 5,000 Barrels Into Farmland
  • 6 days Saudi Oil Minister: Markets Will Not Rebalance By March
  • 6 days Obscure Dutch Firm Wins Venezuelan Oil Block As Debt Tensions Mount
  • 6 days Rosneft Announces Completion Of World’s Longest Well
  • 6 days Ecuador Won’t Ask Exemption From OPEC Oil Production Cuts
  • 6 days Norway’s $1 Trillion Wealth Fund Proposes To Ditch Oil Stocks
  • 6 days Ecuador Seeks To Clear Schlumberger Debt By End-November
  • 6 days Santos Admits It Rejected $7.2B Takeover Bid
  • 7 days U.S. Senate Panel Votes To Open Alaskan Refuge To Drilling
  • 7 days Africa’s Richest Woman Fired From Sonangol
  • 7 days Oil And Gas M&A Deal Appetite Highest Since 2013
  • 7 days Russian Hackers Target British Energy Industry
  • 7 days Venezuela Signs $3.15B Debt Restructuring Deal With Russia

Rosneft Buys Weatherford Operations In Russia, Venezuela

Rosneft Buys Weatherford Operations In Russia, Venezuela

Russian state-owned Rosneft, the most productive oil company in the world, is buying the land drilling operations of Weatherford International in Russia and Venezuela in a deal that’s viewed as a benefit both sides.

For Weatherford, the deal, expected to be closed in the autumn, will mean shedding some of its less profitable enterprises. As one analyst, Brad Handler of Jeffries Group LLC, told Bloomberg News, the company already has been “purging non-core businesses,” and will make $500 million in the process.

Weatherford is an oil and gas services and equipment company founded in Texas and based in Geneva. Earlier this year, it said it wanted to sell off $1 billion of its assets, including some in Russia, as part of a corporate turnaround plan.

At that time, CEO Bernard Duroc-Danner, issued a statement explaining the company’s strategy, saying, “Although our Russian business will be half its present size, the operations will be much leaner, intensely focused on our core product lines, and therefore more profitable.”

Weatherford lately has been focusing on its revenues. The company has recently profited from the increased oil and gas drilling in Canada and the United States, but simultaneously has been under financial pressure because of slow international growth and a rise in one-time charges for its services.

Rosneft, meanwhile, has been focusing on increasing its own drilling to cut costs. Already in 2014 it bought oil rigs from VTB Group while competitors Lukoil, Gazprom Neft and TNK-BP have sold their rigs. Rosneft CEO Igor Sechin said in a statement on July 14, “The deal fully complies with the adopted Rosneft strategy of the development of in-house service business.”

Related Article: Russia’s Arctic Prize Won’t Be As Big As Many Think

The Russian rig operations that Rosneft is buying include 61 land drilling crews and a fleet of workover rigs, so called because they are brought in to rescue oil wells that have failed to respond to traditional drilling. The Venezuela operations include six conventional land drilling rigs.

Weatherford said its rig operations generate roughly half its current revenue in Russia and about one-third in Venezuela. The remaining revenue comes from the company's core oil and gas field services, which in both countries have consistently produced generous profits, the company said.

In February, Weatherford announced its intention to sell its land drilling operations and use the proceeds to pay down its debt, and that it would sell off a variety of non-core operations. The next month it sold its pipeline and specialty service arm to another oil-services company, Baker Hughes Inc., for $250 million.

In a statement on July 14, Duroc-Danner said Weatherford’s turnaround initiative is going according to plan. “After the recent divestment of our pipeline business [to Baker Hughes], this sale [of rigs to Rosneft] is the second step in our efforts to divest our non-core businesses,” he said, adding that the company intends to sell more assets in the coming months.

By Andy Tully of Oilprice.com



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News