Weatherford International Plc (NYSE: WFT) on July 11 said it will sell its land drilling rig operations in Algeria, Kuwait, and Saudi Arabia, as well as two rigs in Iraq, to ADES International Holding Ltd. for $287.5 million.
Weatherford is shedding underperforming assets in a bid to halt losses and trim its debt burden. The deal could boost investor confidence that Weatherford CEO Mark McCollum can turn around the beleaguered oilfield services company.
"Mark McCollum's vision is finally starting to take shape," James West, a senior managing director at Evercore ISI, wrote in a note on Wednesday. "Weatherford may be hitting its stride on the path to becoming a sustainable, focused powerhouse within the industry."
Investors had anticipated the sale to bring in around $250 million, he said.
The deal will include 31 land drilling rigs, related contracts and roughly 2,300 employees and contract workers, the company said. It expects most of the transactions to be largely completed by year-end.
Weatherford said it expects to sell its remaining drilling rigs in smaller transactions in the coming quarters.
McCollum joined Weatherford last year from rival Halliburton Co. (NYSE: HAL), where he had been CFO. He inherited a company with $7.9 billion in debt and still working to recover from the 2014 downturn in oil prices.
On July 11, its shares were trading at $3.49, off more than 85% from four years ago.
McCollum has pledged $1 billion in cost savings by the end of 2019 and is selling assets to pare debt. Last December the firm sold its U.S. fracking business to rival Schlumberger Ltd. (NYSE: SLB).
In addition to its land rig business, the company is looking to sell four smaller businesses that could generate up to $500 million.
In May, McCollum said the firm may need to sell one of its larger businesses to make a major dent in its debt load.