(Bloomberg) — Schlumberger agreed to sell its U.S. and Canadian fracking business, a turning point for the shale industry as the world’s biggest oilfield servicer abandons the work that spawned the past decade’s North American oil boom.
The company based in Houston and Paris said Tuesday its OneStim unit will be combined with Liberty Oilfield Services Inc. in exchange for a 37% stake in the smaller operator. The holding has a value of about $448 million. The combination, which is expected to close in the final three months of this year, will make Denver-based Liberty the second-biggest U.S. fracker with 2.3 million horsepower, according to Citigroup Inc.
OneStim helps customers extract oil and gas from shale wells by blasting water, sand and chemicals underground to release trapped hydrocarbons. When combined with horizontal drilling, fracking helped launch the shale boom more than a decade ago. But now an historic crash in oil prices along with a glut of fracking gear has triggered a crisis among frackers, driving some into bankruptcy.
”The last several months have been extremely challenging for the world, the industry and the Liberty family,” Liberty Chief Executive Officer Chris Wright said in a statement announcing the deal. “This transaction will be a transformative step forward in our journey as a company.”
Schlumberger’s sale comes less than three years after it acquired Weatherford International Plc’s fracking unit. In July, Schlumberger described the decline in fracking demand as “precipitous,” contributing to a 40% plunge in second-quarter revenue.
The Liberty deal is the latest move by Schlumberger CEO Olivier Le Peuch to adjust to the oil crash. The company has announced plans to cut more than 21,000 workers and reshuffle its business around the globe.
“The transaction is consistent with CEO Olivier Le Peuch’s comments about not needing to own frac assets, his strategy for SLB to become asset light and licensing SLB technology to other companies,” Kurt Hallead, an analyst at RBC Capital Markets, wrote in a note to investors.
Liberty rose 28% to $8.27 at 9:59 a.m. in New York for the biggest intraday climb in four months, while Schlumberger fell as much as 2.9%.
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