Weatherford completes sale of Kuwait land drilling rigs

Weatherford is one of the largest multinational oilfield service companies providing innovative solutions, technology and services to the oil and gas industry. The Company operates in over 90 countries and has a network of approximately 710 locations, including manufacturing, service, research and development, and training facilities and employs approximately 28,450 people.

ADES International Holding extends oil and gas drilling and production services through its subsidiaries and is a leading service provider in the Middle East and Africa, offering onshore contract drilling as well as workover and production services. Its over 2,500 employees serve clients including major national oil companies (“NOCs”) such as Saudi Aramco, Kuwait Oil Company and Sonatrach as well as joint ventures of NOCs with global majors including BP and Eni. While maintaining a superior health, safety and environmental record, the Group currently has a fleet of thirteen jack-up offshore drilling rigs, fifteen onshore drilling rigs, a jack-up barge, and a mobile offshore production. Weatherford International has completed the sale of its land drilling operations in Kuwait, including 12 drilling rigs to ADES International Holding for $123 million in cash.

Known material factors that could cause the Company’s actual results to differ materially from the results contemplated by such forward-looking statements are described in the forward looking statements and risk factors in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and those risk factors set forth from time-to-time in other filings with the Securities and Exchange Commission. In July 2018, a subsidiary of Weatherford signed a definitive agreement with ADES International Holding for the sale of Weatherford’s land drilling rig operations in Algeria, Kuwait and Saudi Arabia as well as two idle land rigs in Iraq, for an aggregate cash purchase price of $287.5 million. Weatherford undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events, or otherwise, except to the extent required under federal securities laws.

Weatherford International Plc on Wednesday 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 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 Chief Executive 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.”

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. McCollum joined Weatherford last year from rival Halliburton Co, where he had been chief financial officer. He inherited a company with $7.9 billion in debt and still working to recover from the 2014 downturn in oil prices. 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 NV. The purchase price is also subject to a customary post-closing working capital adjustment. Weatherford will use the proceeds to reduce its debt.

The transaction, which includes 31 land drilling rigs and related drilling contracts, as well as approximately 2,300 employees and contract personnel, is expected to be executed in a series of closings. Most of these will be “substantially completed in the second half of 2018, subject to regulatory approvals, consents and other customary closing conditions,” according to a statement posted on Weatherford’s website. The purchase price is also subject to a customary post-closing working capital adjustment. “We are pleased to have signed an agreement with ADES, a company that is known for providing high quality and efficient services with an extensive track record of serving leading regional and global oil and gas customers,” Mark A. McCollum, president and CEO of Weatherford, said in a company statement. “ADES is acquiring an efficient fleet of land drilling rigs and a dedicated workforce with more than 60 years of experience in delivering drilling efficiency, operational excellence, and first-class safety.

It was very important to us to find a buyer who will continue to provide the same level of service quality, safety and dedication to customers in this region,” he added. Commenting on the Transaction, Dr. Mohamed Farouk, CEO of ADES International Holding, said the group was “truly delighted” to have signed the agreement with Weatherford. “This landmark transaction significantly expands ADES’ total fleet and more than doubles its operational fleet, in line with our strategy of executing smart acquisitions, alongside building our backlog and participation in tenders,” Farouk said in a company statement. “Similar to our prior acquisitions, ADES is committed to the swift value extraction of its acquired assets utilizing the company’s focused business model,” Farouk added. This is the first in a series of four closings, the majority of which are expected to be completed by year-end 2018, subject to regulatory approvals, consents and other customary closing conditions.

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