Schlumberger NV (SLB) and ChampionX Corp. have hurdled an extended anti-trust probe of the oilfield tech companies’ merger by the United States Department of Justice (DOJ).
“[A]ll applicable waiting periods under the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976 have expired, and SLB is legally permitted to close the ChampionX transaction in the United States”, SLB said in an online statement.
However, the combination is facing another extended review in Norway. “As a result, SLB now expects the transaction to close by the end of the first quarter or early in the second quarter of 2025”, the statement said.
The Norwegian Competition Authority said February 25 its initial review found that “competition in several markets could be weakened if Schlumberger is allowed to acquire ChampionX”. It launched a Phase 2 review after the companies’ proposed remedies to the concerns raised in Phase 1 findings failed to satisfy the regulator.
“Both companies offer production chemicals and related services to oil and gas companies on the Norwegian continental shelf”, the Authority said on its website. “Together, the companies have a high market share in this market, and the acquisition will result in customers having one less supplier to set against each other in tenders when purchasing production chemicals”.
“Furthermore, there are vertical relationships between the companies, where ChampionX, among other things, offers quartz transducers and diamond bearings that Schlumberger and Schlumberger’s competitors use as inputs in their offerings of permanent well monitoring and directional drilling in Norway. The Norwegian Competition Authority is concerned that the acquisition could also lead to weakened competition in these markets”.
Rigzone emailed a comment request to SLB.
Shareholders of The Woodlands, Texas-based ChampionX voted in favor of the combination June 2024.
ChampionX shareholders are to receive 0.735 shares of SLB common stock in exchange for each ChampionX share. Upon closing ChampionX shareholders would own about nine percent of SLB’s outstanding common units. ChampionX would survive as a subsidiary of SLB.
“SLB’s acquisition of ChampionX comes at an important time in the industry”, SLB said in the deal announcement April 2, 2024. “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 chief executive Olivier Le Peuch said then, “Our core strategy remains centered on meeting growing energy demand while accelerating decarbonization and emissions reduction through innovation, scale and digitalization 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”.
Announcing U.S. regulatory clearance SLB also said it has reached an agreement with ChampionX for the latter to sell its stake in U.S. Synthetic Corp., which holds the drilling technologies business of ChampionX.
ChampionX separately announced a definitive agreement for the sale to LongRange Capital LP.
“The transaction, which is subject to customary closing conditions, as well as the closing of the previously announced transaction between ChampionX and SLB, is expected to close shortly after the closing of the ChampionX and SLB transaction”, ChampionX said.
