Shares of oilfield services firm Weatherford International Plc (NYSE: WFT) on Nov. 13 slipped below $1 apiece, to a 29-year low, the latest sign that investors are losing confidence in its turnaround plan.
The stock, which peaked at almost $50 in 2008, has fallen sharply since oil prices crashed in late 2014, leading to a string of losses at Weatherford since the third quarter that year. The company has $7.6 billion in long-term debt.
Pressures on its share price intensified in the past two weeks after the Houston-based company missed its free cash flow targets in the latest quarter, and said it would no longer disclose deadlines for achieving asset sales, a signal to investors that it was having trouble finding buyers.
The shares fell 5% to close at 97 cents on Nov. 13.
Analysts said the decline would not result in a breach of debt covenants, but a stock that closes below $1 for 30 consecutive days can trigger a Nasdaq deficiency notice, potentially leading to delisting.
Weatherford did not immediately respond to a request for comment.
Weatherford has pinned hopes for a turnaround on newly appointed CEO Mark McCollum, who has pushed to restructure operations, sell businesses and cut costs.
"Fixing WFT's (Weatherford's) lack of free cash flow generation over the past decade is ultimately the measuring stick by which investors will judge him. So far, the numbers aren't in his favor," analysts from Barclays wrote in a note last month.
The company was $488 million cash flow negative year-to-date at the end of September, and will likely not meet its plan to break even on cash flow for the full year, Barclays analysts said.
U.S. oil producers recently have slowed spending on new wells in the face of surging crude output and transportation bottlenecks.
"Markets aren't helping them a whole lot," said Sajjad Alam, a senior analyst at debt-rating firm Moody's Investors Service. "The more the share price drops the harder it becomes for investors to stay in."
Recommended Reading
For Sale? Trans Mountain Pipeline Tentatively on the Market
2024-04-22 - Politics and tariffs may delay ownership transfer of the Trans Mountain Pipeline, which the Canadian government spent CA$34 billion to build.
Energy Transfer Announces Cash Distribution on Series I Units
2024-04-22 - Energy Transfer’s distribution will be payable May 15 to Series I unitholders of record by May 1.
Balticconnector Gas Pipeline Back in Operation After Damage
2024-04-22 - The Balticconnector subsea gas link between Estonia and Finland was severely damaged in October, hurting energy security and raising alarm bells in the wider region.
Wayangankar: Golden Era for US Natural Gas Storage – Version 2.0
2024-04-19 - While the current resurgence in gas storage is reminiscent of the 2000s —an era that saw ~400 Bcf of storage capacity additions — the market drivers providing the tailwinds today are drastically different from that cycle.
Ozark Gas Transmission’s Pipeline Supply Access Project in Service
2024-04-18 - Black Bear Transmission’s subsidiary Ozark Gas Transmission placed its supply access project in service on April 8, providing increased gas supply reliability for Ozark shippers.