S&P Global Ratings raised its issuer credit rating on Dublin-based Weatherford International PLC to B- from D after the oilfield services company emerged from Chapter 11 bankruptcy but cautioned via a negative outlook that the market factors that drove the company into bankruptcy, including a prolonged decline in oil and natural gas prices, are unchanged.
"In addition, the company has been unable to fully achieve its cost-reduction/transformation targets over the past two years," Ratings wrote in a Dec 16 note.
Weatherford eliminated about $6.2 billion in long-term debt as part of its reorganization and secured $2.6 billion in exit financing facilities. The exit financing included a $450 million revolving credit facility and a $195 million letter of credit facility, which Ratings assigned a B+ issue-level rating with a 1 recovery rating.
Weatherford's $2.1 billion unsecured guaranteed notes due 2024 were assigned a B- issue-level rating with a recovery rating of 3.
Ratings said the oilfield services industry has changed amid permanent efficiency and productivity gains realized by exploration and production companies as well as the investor sentiment that these same companies live within cash flow and keep a lid on production growth.
"These factors are clearly trickling down to the oilfield services companies by reducing the demand for their products and limiting their ability to increase prices given the oversupply of equipment," Ratings said.
This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.