Intelligence Oilfield Services

SLB taking home the prize in $8.2B ChampionX acquisition

byJoseph Gyure, Editor, Enverus Intelligence

In the biggest oilfield services transaction since 2016, SLB agreed to acquire ChampionX Corp. for $7.76 billion in stock, bringing an industry leader in production chemicals into the OFS giant’s fold. ChampionX’s $420 million in net debt brings the transaction to an $8.18 billion enterprise value.

Of the $3.76 billion in revenue that ChampionX reported for 2023, 64% came from its production chemicals segment and 27% from production and automation technologies, which include artificial lift equipment and digital automation applications. The offerings of its smaller segments include polycrystalline diamond cutter inserts and fracking additives. ChampionX posted 2023 net income of $314 million. The company was the product of drilling and production technology company Apergy Corp.’s $4.39 billion acquisition of Ecolab Inc.’s upstream chemicals technology business in 2020.

“The majority of ChampionX revenue is driven by opex, which will become an increasing part of overall upstream exploration and production spend,” SLB CEO Olivier Le Peuch said in an April 2 conference call. “Deliberately increasing our exposure to the production chemicals and artificial lift markets positions us in a growing and resilient spend category into the next decade and beyond. The chemicals sector offers a steady and stable base load of activity decoupled from traditional rig count cycles and commodity prices. As assets age, chemical intensity and usage will further accelerate, and ChampionX is vertically integrated in this market with a significant manufacturing network that is well positioned to deliver on this growing demand.”

ChampionX’s products target E&Ps looking to boost recovery instead of capex.

The company formerly known as Schlumberger estimates that E&P companies spent twice as much on capex as on opex in 2010 but that by 2023 opex made up 46% of spending. By 2040, it expects opex to exceed capex as E&P companies prioritize maximizing production and recovery.

“In artificial lift, nearly 90% of all the wells require one or several forms of lift solution during their producing life,” Le Peuch said. ChampionX’s manufacturing network will help meet the rising chemical demand while its technologies would give SLB a broad lift portfolio, he added. In addition, SLB’s international reach will broaden ChampionX’s global footprint while the OFS giant leverages ChampionX’s U.S. customer relationships, operational agility and fit-for-basin technology, he said.

The transaction’s exchange rate of 0.735 SLB common shares for each ChampionX share values ChampionX at $14.70/share, a 14.7% premium based on April 1’s closing price. At closing, ChampionX shareholders will own 9% of SLB’s outstanding common shares. The transaction requires the approval of ChampionX shareholders and regulators.

Closing is expected by YE24. The transaction will be accretive to free cash flow per share in 2025 and earnings per share in 2026, SLB CFO Stephane Biguet said. SLB expects to realize annual pretax synergies of $400 million within the first three years through revenue growth and cost savings.

The SLB/ChampionX deal is the largest in the OFS sector since the short-lived merger of GE Oil & Gas and Baker Hughes, a $33.9 billion deal announced in 2016. According to Enverus M&A Analytics, four OFS M&A deals of more than $8 billion have closed since 2009. Schlumberger was the buyer in two of them: the $12.3 billion acquisition of Smith International in 2010 and the $14.8 billion acquisition of Cameron International in 2015.

Biggest deal in OFS since GE Oil & Gas briefly merged with Baker Hughes.

Even as this major deal was presumably in the works, ChampionX and SLB have recently dipped into the M&A space. ChampionX announced two deals to boost its artificial lift offering in the previous 35 days: buying Artificial Lift Performance Ltd. for an undisclosed amount then agreeing to acquire RMSpumptools Ltd. for £86 million ($108 million).

Less than a week before the ChampionX announcement, SLB agreed to contribute its carbon capture business to Aker Carbon Capture and pay NOK 4.12 billion ($380 million) to own 80% of the combined company. Le Peuch said April 2 that the transactions were not part of an effort to promote market consolidation but to grow into a key new energy business and align SLB to customer priorities.

While Biguet said ChampionX will not bring meaningful benefits until 2025, SLB will add $500 million in stock repurchases this year, raising its 2024 total target for return of capital to shareholders to $3 billion. SLB returned $2.01 billion to stockholders in 2023, with $1.32 billion in dividends and the rest in stock repurchases. In January, its directors approved a 10% increase in 2024 dividends. Biguet said the company will return $4 billion to shareholders in 2025.

About Enverus Intelligence Publications 
Enverus Intelligence Publications presents the news as it happens with impactful, concise articles, cutting through the clutter to deliver timely perspectives and insights on various topics from writers who provide deep context to the energy sector. 

Picture of Joseph Gyure, Editor, Enverus Intelligence

Joseph Gyure, Editor, Enverus Intelligence

Joseph Gyure has covered midstream and oilfield services since 2017 and joined Enverus from PLS. He previously worked at ICIS, the Houston Chronicle, and the Waco Tribune-Herald. Joseph is a graduate of the University of Texas at Austin.

Subscribe to the Enverus Blog

A weekly update on the latest “no-fluff” insight and analysis of the energy industry.

Related Content

energy-transition
Energy Transition
ByKevin Kang

The anticipated end of a two-year reprieve on solar panel tariffs from China coincided with unexpected tariffs on other energy transition-related sectors.

brno-enverus
Operators
ByBryn Davies

Our twelve-member team embarked on the memorable Vltava Relay challenge, covering 360km in 35 hours, with 300 other competing teams.

nuclear-worker
Energy Transition
ByCarson Kearl

This past week two companies in the advanced reactor space went public. Oklo Inc. (NYSE: OKLO) and Nano Nuclear (NASDAQ: NNE) had mixed opening days, with OKLO seeing nearly a 50% price drop from open and NNE trading up well...

Enverus Press Release - Tapping Alberta’s overlooked lithium brines
Energy Transition Intelligence
ByMatthew Keillor, Editor, Enverus Intelligence

Equinor is acquiring 45% stakes in two of Standard Lithium’s direct lithium extraction (DLE) projects in the Smackover Formation in Southwest Arkansas and East Texas, less than a month after closing the book on its U.S. onshore shale operatorship.

Enverus Press Release: Beyond the horizon: US solar and storage solutions are on the rise
Power and Renewables
ByMarie Amice

Learn how Enverus Contiguous Acreage enhancement simplifies parcel discovery, making negotiations easier and projects more viable.

kid-solar-gallery
Power and Renewables
ByColton Wright

Harnessing Sunlight and Soil As the early morning light filters through the countryside, you find yourself on a quiet rural road. You’re sipping coffee and humming your favorite tune. You’re on your way to see loved ones, explore a national...

emissions-wind-women-working
Power and Renewables
ByBryan DiRenzo

In the United States, the anticipated load growth and the retirement of aging plants to meet state mandates are creating a compelling narrative for the expansion of battery storage infrastructure.

Enverus Press Release - Load impact imminent: Data center growth at the mercy of power supply constraints
Energy Transition
ByJeffery Jen

On March 25, 2024, the EPA released its final rulemaking on the update to 40 CFR Part 60 implementing its New Source Performance Standards for New, Modified and Reconstructed Fossil Fuel-Fired Electricity Generating Units.

accurate-grid-forecastin
Energy Transition Intelligence
ByMatthew Keillor, Editor, Enverus Intelligence

In March 2021, the Biden administration set a goal of deploying 30 GW of offshore wind capacity in the U.S. by 2030. These efforts have faced significant growing pains.

Let’s get started!

We’ll follow up right away to show you a quick product tour.

Let’s get started!

We’ll follow up right away to show you a quick product tour.

Sign up for our Blog

Register Today

Sign Up

Power Your Insights

Connect with an Expert

Access Product Tour

Speak to an Expert