Weatherford and Schlumberger Ink Deal to Form Joint Venture

Weatherford International plc WFT and Schlumberger Ltd. SLB recently announced that they have inked an agreement to form a joint venture (JV) – OneStimSM – to provide completions products and services for the growth of unconventional resource plays in the United States and Canada land markets.

The joint venture is expected to offer one of the largest multistage completions portfolios in the market as well as one of the leading hydraulic fracturing fleet in the industry.

Weatherford will support the JV with its leading multistage completions portfolio, cost-effective regional manufacturing capability and supply chain. Schlumberger, on the other hand, will provide access to its industry-leading surface and downhole technologies, efficient operational processes and advanced geo-engineered workflows.

Schlumberger and Weatherford will hold stakes of 70% and 30%, respectively, in the JV. Subject to regulatory approvals and other customary closing conditions, the transaction is expected to close in the second half of 2017.

Per the terms of the agreement, Schlumberger and Weatherford will contribute their respective North America land hydraulic fracturing pressure pumping assets, multistage completions and pump-down perforating businesses. Weatherford is also entitled to receive a one-time cash payment of $535 million from Schlumberger.

Schlumberger will be responsible for managing the joint venture and consolidating it for purposes of financial reporting.

Investor confidence on the Weatherford stock is reflected in its price chart. Shares of the company appreciated 27.8% in the last three months, while the Zacks categorized Oil Field Machinery & Equipment industry registered a decrease of 6.4% in the same time span.

Currently, Weatherford carries a Zacks Rank #3 (Hold). Some better-ranked players in the same space include Energy Transfer Equity, L.P. ETE and Crescent Point Energy Corp. CPG. Both these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Energy Transfer Equity posted a negative earnings surprise of 16.00% in the preceding quarter. It had an average negative earnings surprise of 9.62% in the four trailing quarters.

Crescent Point Energy posted a positive earnings surprise of 244.44% in the preceding quarter. It beat estimates in all the four trailing quarters with an average positive earnings surprise of 127.16%.

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