Weatherford to sell Russia, Venezuela units to Rosneft for $500 million
GENEVA, Switzerland (Bloomberg) -- Weatherford International signed a deal to sell land drilling operations in Russia and Venezuela to OAO Rosneft for $500 million as part of a divestment plan.
Russia’s largest oil producer will buy 61 land drilling crews and a fleet of workover rigs in Russia from Weatherford and six land-drilling rigs in Venezuela, according to a regulatory filing from Weatherford. The operations generate half of Weatherford’s revenue in Russia and one third in Venezuela, according to the statement.
“De-levering our balance sheet is a top priority,” Bernard Duroc-Danner, Weatherford’s CEO, said in the statement. “Although our Russian business will be half its present size, the operations will be much leaner, intensely focused on our core product lines, and therefore more profitable.”
Weatherford in April pledged to sell or split off as much as $1 billion in assets this year as part of a corporate turnaround plan. Weatherford promised additional steps in the company’s divestment plan over the coming quarters, according to the statement.
Meanwhile, Rosneft has pushed to build its own drilling business to cut costs, buying rigs from VTB earlier this year, as other Russian oil producers including OAO Lukoil, OAO Gazprom Neft and TNK-BP have sold their units.
“The deal fully complies with the adopted Rosneft strategy of the development of in-house service business,” Rosneft CEO Igor Sechin said in a statement.
The deal also sees the development of long-term cooperation between Weatherford and Rosneft and is expected to close in the third quarter of 2014, Rosneft said.
Weatherford bought drilling assets in Russia from TNK-BP in 2009 for $489 million before Rosneft’s acquisition of TNK-BP last year. Weatherford may have accounted for about a third of Rosneft’s drilling business last year, Sberbank CIB wrote in a research note July 14.
The Weatherford Russian operation in the deal has about 7,800 employees, while the Venezuelan business has about 375 workers, according to the statement.