Please ensure Javascript is enabled for purposes of website accessibility

Why Oil States International Stock Is Slumping Today

By Matthew DiLallo - Updated Mar 17, 2021 at 11:13AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The oil-field services company is buying some time.

What happened

Shares of Oil States International (OIS 1.37%) had declined by more than 11% by 10:30 a.m. EDT on Wednesday. Weighing on the oil stock was the pricing of a convertible debt offering. 

So what

Oil States International priced a private offering of $135 million in 4.75% convertible senior notes due in 2026. It also granted purchasers the option to buy up to another $15 million of the notes. They will mature on April 1, 2026, unless repurchased, redeemed, or converted. Oil States has the option to redeem all or a portion of the notes on or after April 6, 2024. 

Red numbers on a screen.

Image source: Getty Images.

The oil-field services company expects to receive $130 million in cash from this offering. It intends to use $120 million of that to repurchase $125 million in the principal amount of its 1.5% convertible senior notes due in 2023. The company expects to use the remainder for general corporate purchases, which could include repurchasing additional 2023 convertible notes or repaying borrowings under its credit facility. 

Now what

Oil States is pushing out a portion of its convertible senior note maturities by issuing those due in 2026 to repurchase some that would have matured in 2023. It's paying a higher interest rate for this additional flexibility, which is weighing on its stock price. It's another step to enhance its balance sheet as it waits for activity in the oil market to improve. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Oil States International, Inc. Stock Quote
Oil States International, Inc.
OIS
$7.42 (1.37%) $0.10

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
322%
 
S&P 500 Returns
116%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.