Will Girish Saligram succeed in turning around oil and gas company Weatherford
January 14, 2022
The rebound in crude oil and natural gas prices, over the past eighteen months, ought to be a tailwind for Girish Saligram, 50-years-old. He is the Chief Executive of Weatherford International, a global energy services business, with executive offices in Houston, Texas, and incorporated in Ireland.
Weatherford provides equipment and services used in the drilling, evaluation, completion, production and intervention of oil and natural gas wells. Many of its businesses have been operating for more than 50 years. It has about 27,000 employees operating in over 75 countries, with about 390 locations including manufacturing, research and development, service, and training facilities.
Up until a decade ago, Weatherford was the fourth largest oil and gas services company in the world. Then, in 2015, the collapse in oil prices and a heavy debt load pushed the company into bankruptcy, in 2019. Last year, after emerging from bankruptcy, Weatherford listed on the Nasdaq stock exchange in the U.S. It has an enterprise value - stock market value plus debt - of $3.8 billion. In 2021, it is estimated to have earned a small profit on about $3.6 billion in revenues.
Saligram has slashed costs at Weatherford but so have its competitors Schlumberger, Halliburton and Baker Hughes, each of which is at least seven times larger than Weatherford in enterprise value. He acknowledges that Weatherford has lost market share to its competitors in recent years. But rather than get overwhelmed, he told The Wall Street Journal, he views it “as a terrific opportunity because we think it’s easier when you’re a small player to get a higher share.”
Saligram, being an Indian American, is a rare chief executive in the U.S. oil and gas industry. The business, having been around for more than a century, is mostly tradition-bound. Many of the employees at U.S. oil and gas companies are former U.S. armed forces veterans. Also, most senior executives have been with their companies for decades. Olivier Le Peuch, the CEO of Schlumberger, which has an enterprise value of $56 billion, joined the company in 1987. In contrast, Saligram joined Weatherford in September 2020, after he was appointed its chief executive.
Earlier, from 2016, Girishchandra K. Saligram served as the chief operating officer of Exterran Corporation, a Houston, Texas oil and gas services company. It has an enterprise value of $650 million. Prior to Exterran, he spent 20 years with GE. From 2008 to 2014, he worked in GE’s oil and gas business including as a General Manager and head of Contractual Services in Italy. Earlier, Saligram spent 12 years with GE Healthcare in engineering, services, operations, and other commercial roles.
Saligram earned a B.E in Computer Science & Engineering from Bangalore University in 1994; an M.S. in Computer Science from Virginia Polytechnic Institute in 1995; and an MBA from the Northwestern University’s Kellogg Graduate School of Management in 2001.
In 2020, Saligram received a salary, bonus and stock options totaling $1.7 million from Weatherford. He owns shares in the company worth $7 million.
Oil currently trades at $83 a barrel, for the West Texas Intermediate crude benchmark, up from around $20 in April 2020; natural gas sells at $4.20 per million cubic feet, for the Henry Hub benchmark, up from $1.60. The rebound in prices is, in part, due to cuts in supplies by the Organization of Petroleum Exporting Countries and Russia and, in part, due to return of demand for automobile and other transportation.
The rise in prices is leading to more drilling activity by energy producers, boosting demand for services. This makes it easier for Saligram to try to boost Weatherford’s revenues and profits.
Some analysts predict that oil prices will spike back up to its previous high of $150 a barrel. If this happens, it will accelerate the push towards electric vehicles and consumption of other forms of green energy, hurting long-term oil demand. Even if oil stays around $80 a barrel, Saligram has to prepare Weatherford for a future of reduced demand for its oil and gas related services, given that more and more electric vehicles and other forms of green alternative energy are being produced each year.
The period of transition, to widespread use of electric vehicles, whether 10 years or 30 years, is unknown, Saligram told WorldOil.com. Saligram says he is focused on two tasks: the company’s role in making current oil and gas production more sustainable, efficient and with a lower carbon footprint; and applying its existing technologies to green areas like geothermal energy. “The bottom line is that it’s not that important to predict how long (the energy transition) is going to last versus what are we doing to it.”
