Weatherford International plc WFRD has recently signed an agreement to acquire NCS Multistage Holdings NCSM in a deal that is intended to broaden WFRD’s footprint and range of offerings in well completions, while expanding the company’s capabilities in the unconventional resource sector. Per the terms of the agreement, the shareholders of NCS Multistage will be able to choose between an all-stock or a cash-and-stock option for the merger consideration.
Expected Synergies and Free Cash Flow Accretion
This implies that NCSM shareholders will receive either only Weatherford common stock or a combination of Weatherford common stock and cash. Overall, the company expects shareholders to receive 0.463 shares of Weatherford common stock in exchange for one NCS Multistage share, with 19.99% of the value to be payable in cash. WFRD noted that the cost synergies from this deal are expected to be at least $15 million on an annual basis, which will be realized within the first 18 months of closing. The acquisition is also expected to be accretive to its adjusted free cash flow per share.
Long-Term Growth Opportunities From the Acquisition
The acquisition of NCS Multistage brings complementary technologies that should enhance Weatherford’s well-completions portfolio and field development solutions. The deal will enable the deployment of innovative, technology-driven solutions that improve operational efficiency and reliability in complex well environments. Additionally, NCS Multistage's services are expected to benefit from Weatherford's extensive global footprint.
WFRD conducts business in nearly 75 countries and offers a wide range of services across the entire well life cycle. Its offerings include drilling support, evaluation, well construction, completions, production, intervention and more. The acquisition is expected to strengthen its capabilities and serve customers at all stages of the well construction and completion lifecycle, and provide increased exposure to the unconventional resource segment.
Zacks Rank and Key Picks
WFRD currently carries a Zacks Rank #3 (Hold), while NCSM has a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks from the energy sector are Cenovus Energy CVE and W&T Offshore WTI. While Cenovus sports a Zacks Rank #1 (Strong Buy), W&T Offshore carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cenovus Energy Inc. is a Canadian integrated energy company with operations spanning across the upstream, midstream and downstream sectors. The company is involved in exploration and production from its low-cost oil sands and heavy oil assets in Canada. The strategic MEG Energy acquisition is expected to boost Cenovus Energy's production levels in 2026.
W&T Offshore benefits from its prolific Gulf of America assets, which offer low decline rates, strong permeability and significant untapped reserves. The company’s recent acquisition of six shallow-water fields in the Gulf of America boosts its future production prospects, which is expected to enhance its revenues.
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W&T Offshore, Inc. (WTI): Free Stock Analysis Report
Cenovus Energy Inc (CVE): Free Stock Analysis Report
NCS Multistage Holdings, Inc. (NCSM): Free Stock Analysis Report
Weatherford International PLC (WFRD): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).