SLB Announces Agreement to Acquire ChampionX in an All-Stock Transaction | SLB

SLB Announces Agreement to Acquire ChampionX in an All-Stock Transaction

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Frequently Asked Questions

How does this acquisition fit within SLB’s strategy?

  • SLB’s core oil and gas business will continue to be a key engine of growth. Deliberately increasing our exposure to the production and recovery space will align us with a growing and resilient OpEx spend category into the next decade.
  • Energy customers are constantly looking to drive more efficient performance and recovery in the production phase of their operations. There is an opportunity to improve and enhance production operations holistically, from increasing digital adoption to lowering costs to lowering carbon intensity. 
  • The combined portfolio will allow for greater innovation, market reach and customer choice and value. 

What are the key offerings of ChampionX?

  • Production Chemicals - Provides oil and natural gas production and midstream markets with solutions to manage and control corrosion, oil and water separation, flow assurance, sour gas treatment and a host of water-related issues.
  • Production and Automation Tech - Designs, manufactures, markets and services a full range of artificial lift equipment, end-to-end digital automation solutions, and other production equipment and asset monitoring technologies; sold under a collection of brands.
  • Drilling Technologies - Designs, manufactures and markets polycrystalline diamond cutters and bearings for use in oil and gas drill bits under the U.S. Synthetic brand.
  • Reservoir Chemicals - Manufactures specialty products that support well stimulation, construction (including drilling and cementing) and remediation needs in the oil and natural gas industry.
 

What are the general financial terms of the transaction?

  • ChampionX shareholders will receive 0.735 shares of SLB in exchange for each share of ChampionX stock. 
  • The agreement places a value of $40.59 per ChampionX share, which represents a 14.7% premium based on the closing price of April 1, 2024.
  • Upon closing, ChampionX shareholders will collectively own approximately 9% of SLB outstanding shares. 
 

How will customers benefit from this proposed deal?

  • Customers will benefit from the enhanced portfolio, geographical reach and technology innovation. SLB’s comprehensive production and recovery portfolio will provide solutions throughout the full lifecycle of the well to increase customer production, reduce overall cost of ownership and lower carbon emissions. 
  • This will help our global customers drive efficiency and longevity of producing assets.  
 

What are the synergies from this acquisition?

  • SLB expects annual pre-tax synergies to reach approximately $400 million within three years, with 70-80% realized in 2026 and the remainder in 2027. These synergies consist primarily of reduced operating costs, supply chain optimization and G&A savings, as well as the benefits from revenue synergies that are expected to grow considerably in future years. The revenue synergies come primarily from new technology innovation leveraging the combined offering and expanding ChampionX’s reach via SLB’s international presence. 
  • A dedicated integration team will start immediately and will work across both companies until closing and beyond, utilizing best practices and lessons learned from other acquisitions. 
 

How does this acquisition impact SLB’s geographical mix?

  • This move will strengthen our international offering while driving innovation and efficiency in North America through SLB’s and ChampionX’s complementary footprints. At closing, SLB’s geographical mix will be 75% international and 25% North America. Post-acquisition, we expect the international revenue mix to climb.  

ChampionX’s artificial lift portfolio includes certain products that SLB divested a few years back. Do you intend to keep those when the transaction closes or if you keep them, why would they now be of interest?

  • ChampionX’s artificial lift portfolio, comprising ESP, Rod Lift, PCP and Gas Lift, is an integrated offering supported by digital capabilities that help customers optimize their lift solutions throughout the life of the well. This business is notably different from the businesses we divested back in 2020, as ChampionX’s integrated offering has strong customer recognition in North America and generates superior margins. Post acquisition, we fully intend to preserve this business and expand internationally.

How will ChampionX be run inside SLB?

  • Our intention is to leverage the best aspects of both organizations. We will preserve the agility and customer relationships in North America, which ChampionX is known for, and we will maximize the benefit from SLB’s market reach internationally. A joint integration team from both organizations will focus on this during the course of the next few months leading to closing.  

How many ChampionX people will transfer to SLB?

  • All of ChampionX’s employees will become SLB employees. 

Is this transaction accretive or dilutive to SLB’s earnings and/or free cash flow?

  • Considering the synergies and based on consensus estimates for both companies, we expect the transaction to be accretive to free cash flow per share in 2025 and accretive to earnings per share in 2026.
  • This includes certain assumptions regarding the purchase accounting, which can only be finalized upon the closing of the transaction.
  • Based on these assumptions, we have estimated the annual incremental after-tax depreciation and amortization as a result of fair value adjustments to the net assets of ChampionX to be approximately $0.06 to $0.07 per share.
 

Why did SLB structure this as an all-stock transaction?

  • The all-stock consideration allows ChampionX shareholders to fully participate in the future upside in SLB’s stock price, while allowing SLB to maintain a strong balance sheet and flexibility in its future capital allocation.

What are the tax effects of the transaction and what is the expected post-acquisition effective tax (ETR) for SLB?

  • The receipt of stock consideration in the transaction will be a taxable event to ChampionX’s shareholders. SLB’s US group will form a wholly-owned US subsidiary that will be merged into ChampionX Corporation, with ChampionX Corporation surviving as a wholly-owned subsidiary of SLB’s US group. 
  • We do not expect SLB’s ETR to materially change as a result of this transaction.   
 

Cautionary Statement Regarding Forward-Looking Statements:
This press release, as well as other statements we make, contain “forward-looking statements” within the meaning of the federal securities laws, which include any statements that are not historical facts. Such statements often contain words such as “expect,” “may,” “can,” “believe,” “predict,” “plan,” “potential,” “projected,” “projections,” “precursor,” “forecast,” “outlook,” “expectations,” “estimate,” “intend,” “anticipate,” “ambition,” “goal,” “target,” “scheduled,” “think,” “should,” “could,” “would,” “will,” “see,” “likely,” and other similar words. Forward-looking statements address matters that are, to varying degrees, uncertain, such as statements about our financial and performance targets and other forecasts or expectations regarding, or dependent on, our business outlook; growth for SLB as a whole and for each of its Divisions (and for specified business lines, geographic areas, or technologies within each Division); the benefits of the ChampionX acquisition, including the ability of SLB to integrate the ChampionX business successfully and to achieve anticipated synergies and value creation from the acquisition; oil and natural gas demand and production growth; oil and natural gas prices; forecasts or expectations regarding energy transition and global climate change; improvements in operating procedures and technology; capital expenditures by SLB and the oil and gas industry; our business strategies, including digital and “fit for basin,” as well as the strategies of our customers; our capital allocation plans, including dividend plans and share repurchase programs; our APS projects, joint ventures, and other alliances; the impact of ongoing or escalating conflicts on global energy supply; access to raw materials; future global economic and geopolitical conditions; future liquidity, including free cash flow; and future results of operations, such as margin levels. These statements are subject to risks and uncertainties, including, but not limited to, changing global economic and geopolitical conditions; changes in exploration and production spending by our customers, and changes in the level of oil and natural gas exploration and development; the results of operations and financial condition of our customers and suppliers; the inability to achieve our financial and performance targets and other forecasts and expectations; the inability to achieve our net-zero carbon emissions goals or interim emissions reduction goals; general economic, geopolitical, and business conditions in key regions of the world; foreign currency risk; inflation; changes in monetary policy by governments; tariffs; pricing pressure; weather and seasonal factors; unfavorable effects of health pandemics; availability and cost of raw materials; operational modifications, delays, or cancellations; challenges in our supply chain; production declines; the extent of future charges; the inability to recognize efficiencies and other intended benefits from our business strategies and initiatives, such as digital or new energy, as well as our cost reduction strategies; changes in government regulations and regulatory requirements, including those related to offshore oil and gas exploration, radioactive sources, explosives, chemicals, and climate-related initiatives; the inability of technology to meet new challenges in exploration; the competitiveness of alternative energy sources or product substitutes; and other risks and uncertainties detailed in this press release and our most recent Forms 10-K, 10-Q, and 8-K filed with or furnished to the Securities and Exchange Commission. If one or more of these or other risks or uncertainties materialize (or the consequences of any such development changes), or should our underlying assumptions prove incorrect, actual results or outcomes may vary materially from those reflected in our forward-looking statements. Forward-looking and other statements in this press release regarding our environmental, social, and other sustainability plans and goals are not an indication that these statements are necessarily material to investors or required to be disclosed in our filings with the SEC. In addition, historical, current, and forward-looking environmental, social, and sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future. Statements in this press release are made as of the date of this release, and SLB disclaims any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events, or otherwise.