Weatherford, which is nearing resolutions of an array of financial restatement woes, analysts say the company could be an acquisition target.
The Houston-based company plans to publish its interim report on income tax restatements on December 17, the same day it will also file amended annual financial statements for 2011 and quarterly financial statements for the first quarter of 2012.
It is undoubtedly beguiling to potential acquirers: it is one of the top drilling service companies for oil and gas, at a time when oil futures are trading at more than $100 per barrel. Weatherford’s stock opened on Wednesday at $10.77 down from more than $20 at the beginning of 2011.
“The stock has been beaten up to such an extent that it’s bound to get the attention of companies that think Weatherford is a good strategic fit – I wouldn’t be surprised to see companies such as Halliburton or GE looking to acquire Weatherford,” said Jim Crandell, an analyst with Dahlman Rose.
Crandell said that Weatherford plans to reduce its debt by selling interests in certain drilling equipment, increased income from meeting earning targets and a reduction in investment spending.
Weatherford’s focus on decreasing debt and strengthening its balance sheet should also boost its stock price, which several analysts have said is undervalued by several dollars at its current price of about $10.
Crandell speculated that a company like Halliburton might be interested in buying the company to take advantage of its artificial lift technology, while GE could be interested in the company’s varied product lines, which could further boost GE’s efforts to build its presence in the services sector.
The company has had, by any account, a difficult year, as it navigated its way through a restatement reducing operating income by $24 million for the first quarter of 2012 and by $55 million for the second quarter of 2012.
Weatherford was not immediately available for comment, but Crandell said that he does not expect management to be shopping around for a new owner.
“I don’t think management wants to sell out at current prices,” Crandell said. “I think they could turn it around on their own – but this could be too good an opportunity to pass up for companies like GE or Halliburton.”