Shares of Weatherford International (NYSE: WFT) are up 14% as of 10:45 a.m. EST today. The cause for the surge comes from the company announcing that it has hired former Halliburton (NYSE:HAL) CFO Mark McCollum as its new CEO.
Well, that was unexpected.
During the fourth quarter, founder and longtime CEO Bernard Duroc-Danner stepped down from his role at the company rather suddenly. Weatherford has been struggling for some time to meet its targets of cutting operational expenses and generating free cash flow. At the time, then-CFO Krishna Shivram took over as interim CEO, and based on the plan he had put forward and some of the deals he had signed, it would have been fair to assume that the CEO position was his for the taking, and getting appointed by the board was a mere formality.
That wasn't the case, apparently, as McCollum was announced today as the new CEO of Weatherford. As part of the announcement that the former Halliburton exec will be taking over, it was also announced that Shivram will be stepping down from the company entirely, and that William Macauley, a long standing board member, would take over the chairman of the board position.
Here's Macauley's statement on the appointment of McCollum as the new CEO:
Consistent with our recent communications, our near-term priorities remain unchanged and focused on driving sustainable free cash flow, higher returns and improved financial flexibility. Furthermore, we remain committed to the core elements of our near-term strategy and will achieve these objectives through debt reduction, non-core asset dispositions and getting back to the basics in the way we work as we continue serving our customers with excellence and the highest level of service quality. The Board and I are highly confident that Mark is well suited to lead Weatherford in these efforts and execute a longer-term strategy to position the Company for the next chapter in its evolution. We look forward to working with him on these important steps.
Perhaps I'm speculating, here, but something smells of a little boardroom tension at Weatherford. Danner was let go almost unceremoniously after more than 30 years at the helm. Shivram, who had presented a plan that was designed to meet the goals outlined in Macauley's statement above, was also unceremoniously relieved of his duties as interim CEO when it looked like he was ready to take the reigns. This move was rather unexpected.
Then again, this is the company that has moved corporate headquarters all over the world multiple times to take advantage of certain tax rules and undergone who knows how many restructuring efforts over the past several years. This perpetual state of flux isn't really conducive of generating long-term returns.
Hopefully, all of this drama is over, and McCollum can step in and put some of his experience from Halliburton to work in meeting those goals of generating free cash flow and returns that can be used to clean up the company's balance sheet. With so many of Weatherford's peers making big moves in recent years to improve their service offerings and improve returns, the company needs to start making progress, or it will really be at risk of falling behind the curve.