Weatherford International's Stock Drops On Heavy Volume After Share Offering

Weatherford International Ltd.'s stock dropped 4.7% in very active premarket trade Wednesday, after the oil services company's large public offering of new shares priced well below current prices. Volume about an hour ahead of the open was already 33.7 million shares, or about double the full-day average over the past 30 days, according to FactSet. The company said late Tuesday that it sold 100 million shares at $5.65 each, which was 8.7% below Tuesday's closing price of $6.19. Including the option granted to underwriters to buy up to an additional 15 million shares, the share sale would represent 15% of the current number of total shares outstanding, according to FactSet data. Analyst Marc Bianchi at Cowen & Co. wrote in a note to clients that that while the offering raises questions about bankers' confidence in Weatherford's free cash flow generation, the offering "shores up the balance sheet and removes and overhang on the stock." The stock has tumbled 26% year to date through Tuesday, while the S&P 500 has slipped 3.2%.