Schlumberger, Aker Solutions and Subsea 7 have agreed to form a new subsea joint venture intended to “deliver a step change in subsea production economics” by helping customers unlock reserves, reduce time to first oil, and lower development costs while in tandem delivering on their decarbonisation objectives.
Aker Solutions and Schlumberger will contribute their subsea businesses into the joint venture which will be owned by Schlumberger on 70%, Aker Solutions on 20% and Subsea 7 on 10%.
Aker Solutions said the combination brings together “deep reservoir domain and engineering design expertise” plus extensive field-proven subsea production and processing technologies, and “world-class” manufacturing scale and capabilities.
The combined business will have about 9000 highly skilled employees globally and the estimated synergy potential is more than $100 million annually in the medium term.
The venture will have “an attractive dividend policy”, according to Aker Solutions.
Schlumberger chief executive Olivier Le Peuch said: “This joint venture will bring together world-class businesses that are uniquely positioned to provide subsea technologies to help our customers improve recovery and reduce overall subsea development costs.
“Customers will benefit from enhanced services that leverage digital and technology innovation to drive improved performance while increasing energy efficiency and reducing CO2 emissions.”
The proposed joint venture will comprise the subsea businesses of Schlumberger and Aker Solutions, with Subsea 7 purchasing 10% of the joint venture from Aker Solutions for $306.5 million in cash.
As part of the proposed deal, Norway’s Aker Solutions will also receive $306.5 million from US oilfield services giant Schlumberger which will be settled by Schlumberger shares.
“By combining our strong and complementary competence and technologies, this compelling combination will deliver an industry step change that will benefit our customers, employees and significantly increase shareholder value,” Aker Solutions chief executive Kjetel Digre said.
“The offshore market activity is increasing, and this joint venture will drive enhanced offerings both in terms of subsea production economics and low-carbon solutions.” The new joint venture will form part of Subsea Integration Alliance, that is currently an unincorporated alliance between Schlumberger and Subsea 7. The alliance will be extended by 10 years from the transaction completion date.
Subsea 7 chief executive John Evans said: “We are excited to build on our highly successful alliance with Schlumberger and partnership with Aker Solutions. This new joint venture is a critical step as we collaborate on the integrated subsea projects that drive maximum value for our customers.”
Completion of the transaction is subject to regulatory approvals as well as other customary closing conditions and is expected during the second half of 2023.
Each contractor will operate its business independently until the deal closes. Based on a scenario where closing takes place in the fourth quarter of 2023, Aker Solutions will in addition to the value of the transactions retain an estimated $300 million of cash generation from its subsea business, for the seven quarters from second quarter of this year until the end of 2023.
Aker Solutions continues to expect 2022 revenues at about Nkr38 billion ($3.91 billion), of which subsea is expected at about Nkr13 billion, and the company expects to recognise a gain of about $1 billion at closing of the proposed subsea joint-venture transactions.
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