SLB to acquire ChampionX in all-stock transaction worth $7.75 billion

SLB and ChampionX Corporation on Tuesday announced a definitive agreement for SLB to purchase ChampionX in an all-stock transaction. The agreement was unanimously approved by the ChampionX board of directors, SLB said in a statement.

Under the terms of the agreement, ChampionX shareholders will receive 0.735 shares of SLB common stock in exchange for each ChampionX share. At the closing of the transaction ChampionX shareholders will own approximately 9% of SLB’s outstanding shares of common stock. Reuters estimated the all-stock deal valuation at US $7.75 billion - SLB's biggest purchase since 2016 when it bought oilfield gear maker Cameron International for $14.8 billion.

Critical phase for the industry

SLB’s acquisition of ChampionX comes at an important time in the industry. The production phase of oil and gas operations typically comprises the majority of an asset’s life cycle from completion through decommissioning. This places a premium on service providers’ ability to help customers address challenges across the entirety of their production system. At the same time, there is growing demand to scale emerging technologies such as AI and autonomous operations across global operations, SLB said.

“Our customers are seeking to maximise their assets while improving efficiency in the production and reservoir recovery phase of their operations,” Olivier Le Peuch, SLB’s Chief Executive Officer, said. “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. The combination of ChampionX’s strong production-focused leadership throughout North America and beyond with our own international presence, unmatched technology portfolio, and history of innovation will drive tremendous value for our customers and stakeholders.

“Our core strategy remains centered on meeting growing energy demand while accelerating decarbonisation and emissions reduction through innovation, scale and digitalisation in our core oil and gas business. This acquisition will expand SLB’s presence in the less cyclical and growing production and recovery space that is closely aligned with our returns-focused, capital-light strategy,” Le Peuch said.

Exciting new chapter for ChampionX

According to Soma Somasundaram, President and CEO of ChampionX, the announcement marks the start of an exciting next chapter for ChampionX.

“We have been on a journey to build the best production-focused company in our sector, with a goal of unlocking energy through our differentiated products and technology as well as our strong financial engine. 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. Our companies share a vision for the future of energy that leverages technology and innovation to solve our customers’ most complex problems and better serve the communities in which we operate,” Somasundaram said.

SLB expects to realise annual pretax synergies of approximately $400 million within the first three years post-closing through revenue growth and cost savings. The transaction is subject to ChampionX shareholders’ approval, regulatory approvals and other customary closing conditions. It is anticipated that the closing of the transaction will occur before the end of 2024.

SLB also announced on Tuesday that it will return $7 billion to shareholders over the next two years. SLB will increase its 2024 shareholder returns to a target of $3 billion as well as set 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,” Le Peuch said.