Rivals form JV to challenge Halliburton
HOUSTON: Schlumberger Ltd and Weatherford International Plc are forming a joint venture aimed at taking on the king of fracking, Halliburton Co.
Schlumberger, the world’s biggest oil-field service provider, would own 70 per cent and be the operator of the hydraulic fracturing partnership, to be known as OneStim, said the two companies in a joint statement on Friday.
Weatherford, the No. 4 oil-field servicer, will own the balance and receive a one-time cash payment of US$535 million (RM2.4 billion).
Fracking, in which companies blast water, sand and chemicals underground to release trapped hydrocarbons, has been one of the most battered businesses in the oil patch during the two-year market downturn.
Weatherford said last month it had shut down its fracking unit and would sell the business after profits evaporated.
The new joint venture, expected to close in the second half of the year, would bring Schlumberger closer to its chief rival Halliburton, which had a total fleet of fracking pumps that add up to three million horsepower, according to Spears & Associates, a Tulsa-based oil-field consultant.
Schlumberger currently has about two million horsepower, while Weatherford has an estimated 800,000 to one million.
“They would be on a par with Halliburton in terms of horsepower,” said Richard Spears, vice-president at Spears & Associates, on Friday.
“I wouldn’t put them on par with Halliburton in terms of revenue, because Weatherford isn’t bringing any business to them. It’s just trucks.”
Last year, some of the biggest oil-field service providers told investors that pricing for their fracking work had dropped to unsustainable levels, forcing Baker Hughes and Weatherford to pull back their businesses.
After a proposed merger with Halliburton failed to gain regulatory approval, Baker Hughes agreed to combine its oil and gas business with General Electric, forming another service company giant to challenge Halliburton and Schlumberger.
The deal remains under regulatory review. Bloomberg
Schlumberger Ltd, the world’s biggest oil-field service provider, will own 70 per cent of the joint venture with Weatherford International Plc.