Weatherford International SWOT and PESTLE Analysis

Strength

Weakness

1. Contraction in cash reserves and losses in business causing bankruptcy: Weatherford International has been a loss making organization since a long time. It was only in the FY19 that it could show positive net income in its accounts but it resulted after several divestures and other cost cutting activities following bankruptcy in 2019. In FY17 and FY18, the company booked net losses of 49.3% and 48% respectively. However, in FY19 it showed a profit of 69.7% worth $3.6 billion, but only due to reorganization as stated above. Again, falling at the wrong place at the wrong time the company had to book a loss worth $966 million due to vehemently low demands of oil after the spread of Covid-19 which resulted in travel bans and lockdown. High amount of long-term debt has resulted to dry down the cash flow in the company. The company was having a net cash outflow of $686 million in 2019 and also maintained the cash outflow for the last two fiscal years prior to 2019. This is making the company weak, which was already bankrupted in 2019. The company has to figure a way out to cover up losses to avoid other financial debacles or sell out.

2. Delisting from NYSE: Weatherford was once a $50 billion star in its sector. After the collapse of oil prices in 2014, the service provider to oil and gas companies could never recover from it's losses. It filed bankruptcy for the second time in 2019. Weatherford's American customers are least interested in further exploration of shale gas due to lower demands in the Covid Era. The capital-intensive nature of its industry has eaten most of its income, due to competitive pricing. It is also downsizing its presence in the US through divestures and job cuts of more than 6000 employees and many contract laborers. In such a scenario, during the 1st quarter in FY2020, the board members of Weatherboard decided to delist itself from NYSE as the company is failing to preserve investor interest and its capital. Strict compliances for American Public companies make decision-making in reorganization slow. The delisting pushes Weatherford to acquire 90% of the outstanding shares in the market or a consent of 90% of its shareholders, which might further add to it's financial worries after being delisted. The numerous fund raising opportunities and protections that public companies in the USA enjoy, especially the credibility of being listed on NYSE, would be eroded from Weatherford.

Opportunity

Threats

Political

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Economic

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Social

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Technological

1. Gloomy future of the growth in oil extraction with rising inclination towards electric vehicles: Weatherford is a part of the distant meta market of the ever-evolving transportation industries. Transport industry constitutes of vehicles, railways and airplanes. Oil and gas industry is heavily dependent on the transport industry. The services of Weatherford are dependent on oil industry players. E-mobility is becoming a viable threat for oil and gas producers. Although electric cars constitute of only 1.0 percent of the total vehicles on road, but with advancement of technology and shift in consumer preferences, this ratio will rise. Already, major railway companies are shifting from diesel engines to electric or hybrid engines for transportation. E-mobility in this scenario possesses a direct threat to oil producing companies and their dependent industries.

Legal

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Environmental

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