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Morningstar | Weatherford in the Midst of a Transformation Plan

CEO Mark McCollum came aboard in March 2017, and many wondered whether it was the dawn of a new era for Weatherford. Although we think this management team will surpass its predecessors (a low bar, to be sure), we don’t think it is well positioned by the Weatherford portfolio of business lines to create substantial amounts of shareholder value.In most business lines, Weatherford holds second-tier status beneath the top three oilfield-services firms: Schlumberger, Halliburton, and Baker Hughes. We expect no change to this arrangement. In the few business lines, such as casing services and lower-end artificial lift, where Weatherford has maintained a leading position in the recent past, we believe it has been steadily losing its competitive advantage.We see Weatherford getting little help from the macro and industry environment. Underpinned by the expansion of low-cost U.S. shale, we expect oil and gas prices to remain lower for the long run. This rules out a return to a period like the late 2000s, when Weatherford earned high profits merely because of a buoyant overall industry environment.All of this means that the window to find value-creating investment opportunities is quite narrow. We expect Weatherford to rebound to modest profitability, but investors hoping for its rebirth as a new top-tier integrated oilfield services firm are likely to be sorely disappointed.