Fulfilling the Promise of Weatherford

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 Financial Performance vs. Peers

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.

Weatherford Oilfield Services Ratings

Weatherford Oilfield Products Ratings

Still-evolving opinions as to what the next-generation supplier should look like further cloud the picture. The Schlumberger-Cameron and GE Oil & Gas-Baker Hughes mergers suggest a model that melds equipment and services into a seamless network capable of generating streams of data meant to improve performance.

At the other end of the spectrum is Halliburton, which seems to almost scoff at the notion that deep integration between services and equipment is the answer. Instead, its “asset-light” strategy seeks to create a nimble and adept competitor focused on delivering a range of products and services in an increasingly efficient manner.

We suspect McCollum, as a co-architect of Halliburton's strategy, will craft an approach favoring capital efficiency over integration. If so, expect the company to deemphasize  its recently announced partnership with Nabors. More importantly, anticipate a company with fewer irons in the fire competing on the strength of its individual products and services. In other words, less breadth and more depth.

The market place would doubtlessly benefit from a more independent-minded Weatherford—one that's primed to compete. For too long, the company has positioned itself as a copycat alternative to the larger global integrated suppliers. A steady hand at the helm and a more clear sense of mission might be just what customers need in order to view the company in a new light.

Integrated Global Oilfield Suppliers Customer Satisfaction

New service from OilVoice
Trip Shepherd is for companies who need to track their staff in areas of risk.
It's free to use, so we invite you to try it.

Visit source site


Weatherford InternationalSchlumbergerHalliburtonBaker HughesOilfield ServicessupplierscustomersOilfield Products

More items from dougsheridan

Surviving the Promises of Technology

Over the years  technology  has played a heralded role in the oil and gas industry. It still does today. Pick up any trade publication and chances are you'll find at least one well-worn tribute to its importance. Yet, the fixation on hi-tech hasn't been without problems. It's even been value-destr ...

Doug Sheridan - EnergyPoint Research

Posted 3 months agoOpinion > Baker HughesBHGEAccelerating Technology +6

Apergy, Helmerich & Payne, Rowan Companies and Core Laboratories Garner Top Honors in EnergyPoint Research's 2018-19 Customer Satisfaction Survey

HOUSTON (February 5, 2019) – As suppliers to the oil and gas industry adjust to lower commodity prices and continuing productivity gains in the field, findings from a newly released Oilfield Products & Services Customer Satisfaction Survey conducted by EnergyPoint Research indicate companies rated ...

Doug Sheridan - EnergyPoint Research

Posted 7 months agoPress > ApergyHelmerich & PayneH&P +10

It Pays to Keep Midstream Customers Smiling

Yes, it pays to keep customers smiling. Even in the midstream. As midstream activity quickens in North America, customers are showing preferences for providers with strong operating and project-development skills. Professionalism also matters. The need for solutions is diverse and widespread. C ...

Doug Sheridan - EnergyPoint Research

Posted 10 months agoOpinion > AMLPAndeavor LogisticsCrestwood Midstream +5

Hope Is Not A Strategy

Imagine a contest between two horses. History suggests one of the animals, having lost the majority of its races against the competitor, is the slower of the two. You are given even odds. Would you bet on the slower horse? The answer, of course, is no. Only a glutton for punishment would take even ...

Doug Sheridan - EnergyPoint Research

Posted 11 months agoOpinion > OilfieldsuppliersOil and Gas Industry +7

Can American Shale Keep It Up?

The New York Times recently published an Op-Ed on the American shale industry that garnered significant attention within the oil and gas community. The piece was written by Bethany McLean , co-author of The Smartest Guys in the Room —the book-turned-documentary that many consider to be the defi ...

Doug Sheridan - EnergyPoint Research

Posted 1 year agoOpinion > Chesapeake Energy CorporationShaleshale oil industry +6
All posts from dougsheridan