Posted by Doug Sheridan - EnergyPoint Research
It is said what CEOs most enjoy is a challenge with outsize reward. If so, Mark McCollum should be ecstatic. As the incoming CEO of Weatherford International, he is now tasked with resurrecting one of the more perennially promising, yet frustratingly underachieving, companies in the oil patch.
McCollum's predecessor, long-time CEO Bernard Duroc-Danner, built an organization with a global presence and broad portfolio. However, the company found itself adrift in recent years as a string of financial losses and shifting strategies undermined employee morale and depleted investor confidence.
Weatherford's problems are not for lack of market interest. For years, customers mostly engaged with the company due to its pricing—which falls between larger integrated competitors and smaller regional suppliers. The result was a steady diet of lower-margin business.
While this positioning was far from ideal, it kept the company in the game. It also kept it its products and services in front of customers. All the while, Weatherford's promise remained its biggest asset as the company worked to build capabilities and a track record to rival its peers. Unfortunately, fulfillment of the promise never arrived.
What did arrive in 2014 was the worst industry downturn in a generation. And by Fall 2016, Duroc-Danner was out. In the ensuing months, the board and interim CEO, Krishna Shivram, moved to stabilize the company and restore confidence. A combination of equity offerings, debt restructurings, strategic partnerships—and a business mix tilted toward North American land—all helped improve the company's footing.
It's not clear the direction McCollum will take the company from here. Shivram and the board introduced a tentative strategy centered on well construction and production optimization. Although Weatherford has an existing portfolio of offerings in both segments, recent customer ratings suggest certain lines need some polish.
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