SLB to expand oil and gas production portfolio with $7.8 billion ChampionX acquisition
(Bloomberg) – SLB agreed to acquire rival oilfield service provider ChampionX Corp. for $7.8 billion in an all-stock deal, a move that will bulk up SLB’s portfolio as aging shale fields prompt US drillers to seek better technology to maintain oil and gas production.
When the deal closes, ChampionX shareholders will own approximately 9% of SLB’s outstanding common stock, the companies said in a statement Tuesday. The deal values each ChampionX share at $40.59, a premium of nearly 15% to the April 1 closing price, according to a presentation posted on SLB’s website.
Shares of SLB fell 0.4% in premarket trading in New York. ChampionX rose more than 12%.
SLB, the world’s biggest oil field services provider, said the deal will expand its presence in oil and gas production and recovery, which is less cyclical than the initial drilling phase. There’s also growing demand to scale up emerging technologies such as AI in the oil field, the company said. The tie-up will boost SLB’s global reach and strengthen its position in North America, according to the presentation.
“Our customers are seeking to maximize their assets while improving efficiency in the production and reservoir recovery phase of their operations,” SLB Chief Executive Officer Olivier Le Peuch said in the statement. “This presents a significant opportunity for service providers who can partner with customers throughout the entire production lifecycle.”
The U.S. is pumping more crude than ever, keeping OPEC and its allies on the defensive. But as the shale industry matures, operators are focused on maintaining and boosting production long after wells have been drilled. And as consolidation among the biggest shale producers continues, service providers will have to follow suit.
The acquisition will help SLB expand its artificial lift technology, which helps keep output from older wells flowing. SLB has the biggest market share in artificial lift with 21%, and ChampionX will add to that with its 5% of the market, according to Evercore ISI, citing data from industry consultant Spears & Associates.
SLB, which was formerly known as Schlumberger, sold its U.S. and Canadian fracing business in 2020 as operators heeded investor calls to rein in spending, sparking concern that activity in the US shale patch would never revisit previous highs.
ChampionX investors will receive 0.735 SLB share for each share of ChampionX. The companies expect the deal to close before the end of 2024, according to the statement.
SLB also announced it will return $7 billion to shareholders over the next two years, including a target of $3 billion for this year and $4 billion for 2025.
