Aker Solutions, Schlumberger and Subsea 7 Create Joint Venture

Rhea-AI Summary

Aker Solutions ASA, Schlumberger, and Subsea 7 announced a Joint Venture to enhance subsea production economics. Following the deal, ownership will stand at Schlumberger (70%), Aker Solutions (20%), and Subsea 7 (10%). Aker Solutions will receive USD 700 million from the sale of a 20% stake, split between stock and cash. The transaction is poised for completion in H2 2023, with an estimated synergy potential of over USD 100 million annually. Aker Solutions expects NOK 38 billion in revenues for 2022, with NOK 13 billion from the subsea segment.

Positive

• Aker Solutions to receive USD 700 million for 20% JV stake.
• Estimated annual synergy potential exceeding USD 100 million.
• Expected revenues for Aker Solutions in 2022 around NOK 38 billion, with NOK 13 billion from subsea.

Negative

• None.

LYSAKER, Norway, Aug. 30, 2022 /PRNewswire/ -- Aker Solutions ASA ("Aker Solutions"), Schlumberger and Subsea 7 have entered into agreements to form a Joint Venture ("JV") to deliver a step change in subsea production economics by helping customers unlock reserves, reduce time to first oil and lower development costs while simultaneously delivering on their decarbonization objectives.

Aker Solutions and Schlumberger will contribute their subsea businesses into the JV which following the transactions will be owned by Schlumberger (70%), Aker Solutions (20%) and Subsea 7 (10%).

This combination brings together deep reservoir domain and engineering design expertise, an extensive field-proven subsea production and processing technology portfolio, world-class manufacturing scale and capabilities, and a comprehensive suite of life-of-field solutions to customers all over the world. 

The transactions are interdependent and subject to regulatory approvals, as well as other customary closing conditions, and are expected to close during the second half 2023.

The transaction structure and terms - Aker Solutions will receive USD 700 million in consideration for the sale of a 20% ownership in the JV and retain a 20% ownership in the JV as follows:

• USD 306.5 million in proceeds from Schlumberger which will be settled in the form of shares in Schlumberger. The shares will be settled based on the volume weighted average price for the ten trading days ending on the fifth trading day preceding closing of the transaction and is subject to a lock-up period of minimum 180 days
• USD 306.5 million in proceeds from 10% divestment to Subsea 7 which will be settled in cash. USD 153 million of these will be settled at closing and the remaining USD 153.5 million will be settled, with interest, at the latest on June 30, 2024
• USD 87.5 million in proceeds from a vendor note from the JV to be paid, with interest, to Aker Solutions with minimum 50% one year from closing and the remainder within two years from closing
• Subsea Integration Alliance, currently an unincorporated alliance between Schlumberger and Subsea 7, will continue between the JV and Subsea 7. The alliance will be extended by 10 years from the closing date of the transaction
• The Board of directors of the JV will consist of three representatives from Schlumberger, two from Aker Solutions and one from Subsea 7
• The combined business will have approximately 9,000 highly skilled employees globally. Estimated synergy potential is more than USD 100 million per annum in the medium term, and the JV will have an attractive dividend policy

Each party will operate their businesses independently and in the normal course until closing. Based on a scenario where closing takes place in the fourth quarter of 2023, Aker Solutions will in addition to the value of the transactions retain an estimated USD 300 million of cash generation from its subsea business, for the seven quarters from second quarter of 2022 until end 2023. 

"This joint venture will bring together world-class businesses that are uniquely positioned to provide subsea technologies to help our customers improve recovery and reduce overall subsea development costs," said Schlumberger Chief Executive Officer Olivier Le Peuch. "Customers will benefit from enhanced services that leverage digital and technology innovation to drive improved performance while increasing energy efficiency and reducing CO2 emissions."

"By combining our strong and complementary competence and technologies, this compelling combination will deliver an industry step change that will benefit our customers, employees and significantly increase shareholder value. The offshore market activity is increasing, and this joint venture will drive enhanced offerings both in terms of subsea production economics and low-carbon solutions," said Kjetel Digre, Chief Executive Officer of Aker Solutions.

Subsea Integration Alliance, a nonincorporated alliance between Schlumberger and Subsea 7, will be merged into the new entity with an extended renewal period of 10 years from closing of the transaction. "We are excited to build on our highly successful alliance with Schlumberger and partnership with Aker Solutions. This new joint venture is a critical step as we collaborate on the integrated subsea projects that drive maximum value for our customers," commented John Evans, Subsea 7 Chief Executive Officer.

Following the transactions, Aker Solutions will be better placed to deliver on its strategy to accelerate its transformation to meet global energy needs both within oil and gas and renewables. Enabled by Cognite's data platform and Aize's software applications, Aker Solutions will continue to grow as a digitally empowered engineering and project execution company servicing the energy market.

Aker Solutions continues to expect 2022 revenues at around NOK 38 billion, of which Subsea is expected at around NOK 13 billion. Following the transactions Aker Solutions will hold 20% ownership in the subsea JV and a large and significant business comprising the EMM- and Renewables & Field Development segments. This business alone is expected to deliver revenues of around NOK 25 billion in 2022. 

Aker Solutions expects to recognize a gain of around USD 1 billion following the transactions, at closing.

Media Contacts:
Torbjorn Andersen, Vice President of External Communications, Aker Solutions
Tel: +47 928 85 542
torbjorn.andersen@akersolutions.com

Josh Byerly - Vice President of Communications, Schlumberger
Moira Duff - Director of External Communication, Schlumberger
Tel: +1 (713) 375-3407
media@slb.com

Julie Taylor, Head of Group Communications, Subsea 7
Tel +44 1224 526270
julie.taylor@subsea7.com

Investor Contacts:
Fredrik Berge - Vice President of Investor Relations, Aker Solutions
Tel: +47 450 32 090
fredrik.berge@akersolutions.com

Ndubuisi Maduemezia - Vice President of Investor Relations, Schlumberger
Joy V. Domingo - Director of Investor Relations, Schlumberger
Tel: +1 (713) 375-3535
investor-relations@slb.com

Katherine Tonks - Investor Relations Director, Subsea 7
Tel: +44 20 8210 5568
katherine.tonks@subsea7.com

This information was brought to you by Cision http://news.cision.com

https://news.cision.com/aker-solutions-asa/r/aker-solutions--schlumberger-and-subsea-7-create-joint-venture,c3622525

 

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SOURCE Aker Solutions ASA

FAQ

What is the new joint venture between Aker Solutions, Schlumberger, and Subsea 7 about?

The joint venture aims to enhance subsea production economics by unlocking reserves and reducing costs while focusing on decarbonization.

What is the ownership structure of the new joint venture?

The joint venture will be owned by Schlumberger (70%), Aker Solutions (20%), and Subsea 7 (10%).

How much will Aker Solutions receive from the joint venture transaction?

Aker Solutions will receive USD 700 million for its 20% stake, with proceeds coming from both Schlumberger shares and cash from Subsea 7.

What are the expected revenues for Aker Solutions in 2022?

Aker Solutions anticipates revenues of approximately NOK 38 billion for 2022, with the subsea segment contributing around NOK 13 billion.

When is the joint venture expected to close?

The joint venture is expected to close during the second half of 2023, subject to regulatory approvals.