Schlumberger and Weatherford to Form Joint Venture

Schlumberger and Weatherford announced that they will create a joint venture to deliver completions, products, and services for the development of unconventional resource plays in the US and Canada land markets. The joint venture will offer one of the broadest multistage completions portfolios in the market combined with one of the largest hydraulic fracturing fleets in the industry, the companies said in a statement.

Weatherford will contribute its multistage completions portfolio, regional manufacturing capability, and supply chain. Schlumberger, the world’s largest oilfield service provider, will provide the joint venture with access to surface and downhole technologies, operational processes, and geo-engineered workflows.

Schlumberger and Weatherford will have 70/30 ownership of the joint venture, respectively. The transaction is expected to close in the second half of 2017, and is subject to regulatory approval. Under the terms of the agreement, Schlumberger and Weatherford will contribute all their respective North America land hydraulic fracturing pressure pumping assets, multistage completions, and pump-down perforating businesses. Weatherford will also receive a one-time USD 535 million cash payment from Schlumberger.

Schlumberger will manage the joint venture.

“The joint venture creates a new industry leader in terms of hydraulic horsepower and multistage completions technologies in North America land, which through its scale offers a cost-effective and highly competitive service delivery platform,” Schlumberger Chairman and CEO Paal Kibsgaard said in a statement. “OneStim [the joint venture’s name] is uniquely positioned to provide customers with leading operational efficiency and best-in-class hydraulic fracturing and completions technologies, while at the same time significantly improving full-cycle shareholder returns from this market.”

The world’s largest provider of hydraulic fracturing services is Halliburton, which has a total fleet of fracturing pumps that add up to 3 million horsepower, according to consultancy Spears & Associates. Schlumberger currently has about 2 million horsepower, while Weatherford has an estimated 800,000 to 1 million, according to a Bloomberg report.
 
“They would be on par with Halliburton in terms of horsepower,” Richard Spears, vice president at Spears & Associates, told Bloomberg. “I wouldn’t put them on par with Halliburton in terms of revenue, because Weatherford isn’t bringing any business to them. It’s just trucks.”

Last year, Baker Hughes and Weatherford pulled back on their fracturing businesses. After a proposed merger with Halliburton did not win regulatory approval, Baker Hughes agreed to combine its oil and gas business with General Electric to form a service company giant to challenge Halliburton and Schlumberger. The deal remains under regulatory review.

Last week, Halliburton announced that it would reactivate twice as much of its fleet this year as it originally expected as a surge in shale drilling raises demand, according to press reports. The company also said that it is adding 2,000 US jobs in the first quarter and increasing activity faster than anticipated to surging oilfield activity, especially in the Permian Basin of west Texas.

Schlumberger and Weatherford to Form Joint Venture

27 March 2017