Schlumberger (NYSE: SLB) announced on Tuesday that it has agreed to buy ChampionX (CHX) in a deal where they will exchange stocks. Schlumberger says this move will make its position in the oilfield services industry stronger by adding top-notch production chemicals and artificial lift technologies from ChampionX.
Key Points:
- Acquisition Details: Schlumberger (SLB) is acquiring ChampionX (CHX) through an all-stock deal, meaning no cash is involved. This means that ChampionX shareholders will receive 0.735 shares of Schlumberger common stock for each share they hold in ChampionX.
- Ownership Share: After the deal closes, ChampionX shareholders will own approximately 9% of the total outstanding common shares of Schlumberger.
- Valuation: The deal values ChampionX at around $7.8 billion, based on the closing prices of both companies’ stocks on Monday. This translates to roughly $40.59 per share for ChampionX, representing a premium of 14.7%.
- Synergies: Schlumberger expects to achieve around $400 million in annual pretax synergies within the first three years of completing the deal. These synergies are anticipated to come from both increased revenue and cost savings.
- Shareholder Returns: Schlumberger plans to return $7 billion to its shareholders over the next two years. This includes raising the target for shareholder returns in 2024 to $3 billion and setting a target of $4 billion for 2025.
By acquiring ChampionX, Schlumberger aims to enhance its offerings in the oilfield services sector, particularly in production chemicals and artificial lift technologies. This move aligns with Schlumberger’s strategy to strengthen its position in the market and maximize returns for its shareholders.
The acquisition is structured as an all-stock deal, wherein ChampionX shareholders will receive Schlumberger stock in exchange for their ChampionX shares. This approach allows Schlumberger to expand its business without involving cash transactions.
Additionally, the valuation of the deal reflects a premium for ChampionX shareholders, indicating the perceived value of ChampionX’s assets and technologies within the industry. This premium also signifies confidence in the potential synergies and growth opportunities resulting from the acquisition.
Schlumberger anticipates significant synergies from the deal, which are expected to contribute to revenue growth and cost savings. These synergies are projected to amount to approximately $400 million annually within the first three years post-closure, enhancing the overall value proposition of the acquisition.
Furthermore, Schlumberger’s commitment to returning a substantial portion of the deal value to its shareholders demonstrates its focus on creating value and maintaining shareholder satisfaction. By setting ambitious targets for shareholder returns over the next two years, Schlumberger aims to reassure investors of the company’s financial strength and future prospects.
About Schlumberger
Schlumberger, officially known as Schlumberger Limited, is an American oilfield services company. Founded in 1926 in Paris by brothers Conrad and Marcel Schlumberger, it initially operated as the Electric Prospecting Company. Over the years, Schlumberger has become a global leader in providing technology and services to the petroleum industry. Here are some key details about Schlumberger:
- Industry Focus:
- Schlumberger specializes in various aspects of the oil and gas sector, including:
- Reservoir Characterization: Using advanced technology to understand subsurface formations.
- Drilling Services: Assisting in drilling operations.
- Production and Processing: Enhancing oil and gas production.
- Software and Information Management: Developing tools for data analysis and decision-making.
- Groundwater Extraction and Carbon Capture: Expanding beyond oil and gas into related fields.
- Schlumberger specializes in various aspects of the oil and gas sector, including:
- Global Reach:
- Schlumberger operates worldwide, providing services to clients across the globe.
- Its headquarters are located in Houston, Texas, United States.
- The company is incorporated in Willemstad, Curaçao, Netherlands Antilles.
- Schlumberger trades on several stock exchanges, including the New York Stock Exchange, Euronext Paris, the London Stock Exchange, and the SIX Swiss Exchange.
- Size and Ranking:
- As of 2022, Schlumberger holds the distinction of being both the world’s largest offshore drilling company and the world’s largest offshore drilling contractor by revenue.
- The Forbes Global 2000 ranks Schlumberger as the 349th largest company in the world.
In summary, Schlumberger plays a crucial role in the energy industry, leveraging cutting-edge technology and expertise to support exploration, drilling, and production processes globally.
About ChampionX
ChampionX is a global leader in chemistry solutions, artificial lift systems, and highly engineered equipment and technologies for the oil and gas industry. Let’s delve into the details:
- Chemistry Solutions: ChampionX provides chemistry programs and services for upstream and midstream operations. These solutions enhance oil and gas production, transportation, and real-time emissions monitoring throughout the lifecycle of a well.
- Artificial Lift Systems: The company specializes in artificial lift solutions. These systems help optimize oil and gas production by efficiently lifting fluids from wells to the surface.
- Highly Engineered Equipment and Technologies: ChampionX offers cutting-edge equipment and technologies designed to improve drilling efficiency, well construction, and completion. Their digitized operations further enhance overall performance.
With over 7,300 employees, operations spanning 60 countries, and more than 40 manufacturing locations, ChampionX is committed to safety, sustainability, and innovation in the oil and gas industry.
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