SLB (NYSE: SLB) and ChampionX Corporation (NASDAQ: CHX) have announced a definitive agreement for Schlumberger to acquire ChampionX in an all-stock transaction.
The agreement, which was unanimously approved by the ChampionX Board of Directors, marks a significant development in the oil and gas industry.
Under the terms of the agreement, ChampionX shareholders will receive 0.735 shares of SLB common stock in exchange for each ChampionX share.
Following the closing of the transaction, ChampionX shareholders will own approximately 9 per cent of SLB’s outstanding shares of common stock.
The acquisition is seen as timely, given the importance of the production phase in oil and gas operations — which typically comprises the majority of an asset’s life cycle.
There is a premium on service providers’ ability to assist customers in addressing challenges across their production systems.
Additionally, there is a growing demand for scaling emerging technologies such as AI and autonomous operations across global operations.
SLB CEO Olivier Le Peuch commented on the strategic significance of the acquisition: “Our customers are seeking to maximise their assets while improving efficiency in the production and reservoir recovery phase of their operations.
“This presents a significant opportunity for service providers who can partner with customers throughout the entire production lifecycle, offering integrated solutions and delivering differentiated value.”
ChampionX President and CEO Soma Somasundaram stated: “Becoming part of SLB will give us a much broader portfolio and the resources and reach to continue to lead the industry in providing energy to the world in an economically and environmentally sustainable way.”
The transaction is expected to result in annual pretax synergies of approximately $400 million within the first three years post-closing, through revenue growth and cost savings.
The closing of the transaction is subject to ChampionX shareholders’ approval, regulatory approvals, and other customary closing conditions, and is anticipated to occur before the end of 2024.
In addition to the acquisition announcement, SLB also announced plans to return $7 billion to shareholders over the next two years.
This includes an increase in 2024 shareholder returns to a target of $3 billion, as well as setting a target for 2025 shareholder returns of $4 billion.
“This commitment to our shareholders for 2024 and 2025 highlights our confidence in the value this transaction will create and in our ability to continue generating strong cash flow from our broader portfolio this year and next,” said Le Peuch.