UPDATE: Weatherford Announces Will Sell Russian, Venezuelan Land Rig Operations to Rosneft For $500M In Cash

Weatherford International plc

entered into agreements with Rosneft for the sale of the Company's land drilling and workover operations in Russia and Venezuela. The consideration is $500 million in cash. The Russian rig operations include 61 land drilling crews and a fleet of workover rigs, essentially pulling units while the Venezuela operations include 6 land drilling rigs. The rig staffing is approximately 7,800 in Russia and 375 in Venezuela and will be transferred to Rosneft at closing. The agreement is another step in Weatherford's previously announced plan to divest the Company's non-core businesses. These rig operations generate roughly half of Weatherford's total existing revenue in Russia and approximately one-third of Weatherford's business in Venezuela. The remaining balance consists of Weatherford's core product lines, which have in both markets consistently produced over time, good margins and strong capital attributes. The Company expects its core product line business in Russia to be developed further with joint commitments from Rosneft and Weatherford. The sale is subject to customary closing conditions and regulatory approvals and is expected to close in the third quarter of 2014. Bernard J. Duroc-Danner, Chairman, President and Chief Executive Officer of Weatherford stated: "After the recent divestment of our pipeline business, this sale is the second step in our efforts to divest our non-core businesses. There will be additional steps over the coming quarters. De-levering our balance sheet is a top priority. Although our Russian business will be half its present size, the operations will be much leaner, intensely focused on our core product lines, and therefore more profitable. We will dedicate ourselves to the long-term development of Russia's reservoir base. Following this sale, our remaining 115 international land drilling rigs, the majority of which are in the Middle East, are being prepared as planned for issuance in the public market in 2015 as an independent international drilling contractor." Commenting on the signing, Rosneft President Igor Sechin said: "The deal fully complies with the adopted Rosneft strategy of the development of our in-house service business. The acquisition of Weatherford's assets will allow us to secure, under the terms of maximum price transparency, the Company's most important regions of operation with service and workover machinery. Moreover, the agreement forms part of the Company's initiative for the development of competencies in the service sphere in cooperation with Weatherford. We are sure that our mutually beneficial cooperation will develop actively both in Russia and abroad."