Weatherford To Sell Engineered Chemistry, Integrity Drilling Fluids Units

(RTTNews) - Oilfield service company Weatherford International plc (WFT) agreed Monday to sell its engineered chemistry and Integrity drilling fluids business to an affiliate of Lubrizol Corp., a Berkshire Hathaway company, for $750 million in cash. The sale, subject to customary closing conditions and regulatory approvals, is expected to close before year end 2014.

The total consideration is subject to customary purchase price adjustments, and a potential increase of $75 million for an earnout that is tied to the post-closing performance of the businesses. Weatherford said the proceeds from the sale will be used to pay down debt.

"For us, it is a decisive move into a large adjacent market space that, we believe, will value the combined technologies, fluid formulation capabilities and applications knowledge of our legacy and newly acquired businesses," Lubrizol Chairman, President and CEO James Hambrick said in a statement.

Weatherford's engineered chemistry business provides chemical treatments for oil and gas production and produced waters as well as additives for drilling, workover and stimulation operations. Meanwhile, the Integrity drilling fluids business includes drilling fluid systems and additives for enhanced performance of drilling operations.

The sale is part of Weatherford's previously announced plan to divest its non-core businesses in order to refocus on its core businesses and become a leaner, more efficient and stronger company. The high margin core businesses include well construction, formation evaluation, completion, stimulation and artificial lift.

While reporting its financial results for the fourth quarter in late January, the company said it will in 2014 focus on growing its core businesses, making the cost base more efficient, and divesting non-core businesses as well as reducing net debt.

The company said then that it will focus of the cash sales of four businesses, the pipeline and specialty services, testing and production services, drilling fluids and wellheads. It also plan an IPO or spin-off of its land drilling rig business in the fourth quarter of fiscal 2014 or first quarter of fiscal 2015.

Weatherford CEO Bernard Duroc-Danner said: "The agreement is another step in Weatherford's previously announced plans to divest the Company's non-core businesses. This transaction brings our realized cash divestiture proceeds to approximately $1.8 billion during 2014 and implies that our net debt will range between $6.6 billion to $6.8 billion at year end 2014. This is substantial progress."

In August, the company completed the sale of its land drilling and workover operations in Russia and Venezuela to Russian state oil company OAO Rosneft (ROSN.L) for a consideration of $500 million in cash. It also completed the sale of its pipeline and specialty services business to a subsidiary of Baker Hughes, Inc. (BHI) for a total consideration of $250 million in September.

WFT closed Friday's regular trading session at $13.10, down $1.33 on a volume of 9.87 million shares.