Weatherford Dumps Ballast: Should You Buy Now?
NEW YORK (TheStreet) -- Weatherford International
But the company built by Bernard Duroc-Danner is not out of the financial woods. It has more than $1 in debt for each $3 in assets, its cash position is poor and its profit margin hovers around zero.
The shares are rising because earlier this month it announced a divestiture plan aimed at reducing debt by $3 billion to $5 billion by the end of 2015. Also, this week the company settled foreign bribery charges, deferring two prosecutions and settling a civil case for $253 million. The company last year had earmarked $100 million to settle some charges.
The sales should cut Weatherford's debt by about half. The fines would nearly wipe out a cash position that stood at $316 million at the end of September.
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Weatherford operates out of Houston, but it's technically based in Switzerland, having moved there in 2009 when Transocean
At the time there was great fear in the oil patch that the incoming Obama administration would be bad for the oil-service business. In fact, the U.S. oil business has boomed since that time, and this country is on track to become self-sufficient in oil.
The charges alleged by the government include bribery of Middle Eastern and African officials, including abuse of the United Nations' oil-for-food program, with lax controls that included falsified records. Duroc-Danner said after the settlement was announced this week that the charges are now behind the company.
I slammed Duroc-Danner's record one year ago, after the stock fell from a high of more than $25 to a 2012 low of less than $10. It reported $500 in tax errors during 2011, which it called an "honest mistake," then got a new chief financial officer.
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