Schlumberger Ltd. is selling its North America fracking business to Liberty Oilfield Services Inc. as the Houston-based oilfield services giant shifts its focus away from the U.S. shale business.
Alongside peers Halliburton Co. and Baker Hughes Co., Schlumberger has begun planning for a significantly leaner future following the worst price cash in decades, leading the big three service providers away from the high-cost shale industry.
In a joint release on Sept. 1, Schlumberger said it agreed to contribute OneStim, its onshore hydraulic fracturing business in the U.S. and Canada, to Denver-based pressure pumper Liberty Oilfield Services. In exchange, Schlumberger will receive a 37% equity interest in the combined company, which is expected to have a $1.2 billion market cap.
The announcement follows plans Schlumberger outlined in July for deeper spending cuts after recording a $3.7 billion charge, a second straight quarterly loss and cutting thousands of job. The job cuts also included the closure of 150 North American facilities.
The sale of OneStim to Liberty includes Schlumberger’s pressure pumping, pumpdown perforating, and Permian frac sand businesses. The transaction, set to close fourth-quarter 2020, is expected to create one of the largest pressure pumping companies in North America.
In a statement commenting on the sale of OneStim, Schlumberger CEO Olivier Le Peuch said: “This partnership provides an ideal home for our OneStim business and its employees and is in line with our capital stewardship strategy while benefiting from future market upside through our equity stake.”
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Following the acquisition of OneStim, Liberty will have a robust balance sheet with no net debt and significant available liquidity, according to the joint release.
Additionally, the combined company has a 2019 pro forma revenue of $5.2 billion, the release said.
In a recent interview with Oil and Gas Investor, Chris Wright, CEO and chairman of Liberty Oilfield Services, said he expected Liberty to grow through this cycle.
Liberty was forced to make staff cuts earlier this year for the first time in company history, Wright said, due to the collapse in oil prices.
“It’s not only our goal; it’s our mission as this thing rebounds to grow the business back up and bring everyone back,” he told Oil and Gas Investor.
In the joint release on Sept. 1, Wright described the OneStim transaction with Schlumberger as a transformative step forward in Liberty’s journey as a company.
“The last several months have been extremely challenging for the world, the industry and the Liberty family,” he said in a statement on Sept. 1. “These times also bring opportunity.”
“Our expanded technology portfolio and breadth of operations will enable Liberty to further raise our already high bar for safe, innovative, efficient and ESG-conscious frac operations,” he continued.