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Weatherford Chief Executive Duroc-Danner steps down

November 11, 2016

Weatherford International PLC said Chairman and Chief Executive Bernard J. Duroc-Danner is leaving the oil-field services company.

Mr. Duroc-Danner built Weatherford into an oil-field-services giant through a flurry of acquisitions. But the company has struggled for years to recover from a series of management missteps, compounded by cratering oil prices that decimated its business.

Weatherford shares ended the day up 33.16%.

Chief Financial Officer Krishna Shivram will lead the company as interim CEO. The company said Mr. Shivram will remain finance chief until a new CFO is named, expected in the coming days. Mr. Shivram, an industry veteran, was named finance chief of Weatherford in November of 2013.

Vice Chairman Robert Rayne will become chairman.

Mr. Duroc-Danner said in an interview Wednesday that his departure from the company was amicable and that he had personally groomed his successor and other younger executives to take over.

“I’ve been doing this a long time,” he said. “As a matter of personal pride and love for the company I wanted to fix every problem we have.”

He said the accounting problems that have dogged the company in recent years have been solved and although the company remains highly indebted, he see “no remote possibility” that the company won’t be able to manage its debt and navigate the oil slump.

Mr. Duroc-Danner moved to Houston in 1987, during the depths of a previous oil bust, to join Weatherford’s predecessor company. Born in Paris, he has a Ph.D. and an M.B.A. from the University of Pennsylvania’s Wharton School of Business. By 2015, the company generated $9.4 billion in revenue, up from $100 million in 1989.

The two-year downturn in oil prices has cut into profits for companies that help producers drill and frack wells, and the bust hit Weatherford particularly hard. Since oil prices collapsed in the second half of 2014 it has lost more $5 billion, and its quarterly sales have fallen to about half of what they were before prices fell. The company carried about $7.5 billion in debt as of Sept. 30, or more than twice its stock market value.

But Weatherford’s problems predate the downturn. Weatherford’s shares had dropped by more than 55% this year before Wednesday, frustrating investors as shares of Halliburton, Schlumberger, and Baker Hughes made strides.

Piper Jaffray & Co. analyst Bill Herbert said Mr. Duroc-Danner’s departure was “expected and perhaps overdue one given WFT’s exceedingly turbulent results, immense stock price underperformance and growing frustration on the part of the company’s largest shareholders not only with the company’s performance but with the passivity on the part of the board.”

The company had to restate its financial statements on three occasions in 2011 and 2012, and in September agreed to pay a $140 million penalty to resolve a Securities and Exchange Commission investigation into accounting fraud. Regulators had alleged the company’s executives intentionally inflated earnings by using “deceptive income-tax accounting.”

In 2013, the company paid $253 million to settle government investigations into foreign bribery and trade-sanction violations.

In an interview in 2013, Mr. Duroc-Danner, now 63, said the company didn’t add enough staff for accounting or corporate governance during its rapid expansion, and said his attention was stretched too thin.

“Frankly, it would have been fabulous to have been relieved of my position back then—it was that hard,” Mr. Duroc-Danner said of the darkest days in 2012 when the company’s stock price cratered and the two investigations loomed large. “You don’t know what it is when an organization self-destructs.”

By Ryan Dezember, Tess Stynes and Alison Sider

Source: Wall Street Journal

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