Baker Hughes Co. agreed to sell the surface pressure control (SPC) flow business unit in its oilfield equipment segment to Pelican Energy Partners LP for an undisclosed amount on Sept. 10.

The sale follows comments CEO Lorenzo Simonelli made recently about downsizing Baker Hughes’ oilfield services and equipment portfolio in preparation for the energy industry’s transition to a low-carbon future. Baker Hughes has already started to shed some oilfield assets as part of a company strategy to bolster its footprint in technologies needed for renewables.

“We believe that the changes facing the oil and gas markets and rapid growth in demand for lower carbon solutions warrant an acceleration of our strategy,” Simonelli noted during the Barclays CEO Energy-Power virtual conference according to a recent Reuters report.

The deal also comes as the big three oilfield service providers shift away from the high-cost shale industry. Schlumberger Ltd., for example, made headlines last week with the announcement of the sale of its North America fracking business, OneStim.

The sale of Baker Hughes SPC Flow unit consists of wellhead product sales and service as well as a rental offering of frac trees, valves and zipper manifolds. As part of the agreement, Baker Hughes will retain the SPC projects business comprising surface and subsea product offerings in the Middle East, Africa, North Sea and Asia.

Founded in 2011, Pelican Energy Partners is a Houston-based private equity fund specializing in strategic investments in small to middle-market, high-growth potential energy service and equipment companies with sustained earnings outlooks. The firm has raised $563 million of committed capital and is investing out of its third fund, according to a release by Pelican.

In the firm’s release, Pelican said it is working in cooperation with the management team of SPC flow to carve-out the business unit as a stand-alone business.

“This carveout transaction will enable the business to be a more focused, nimble and responsive company,” Mike Scott, managing partner of Pelican, said in a statement. “We are glad to be supporting this management team that strongly believes that as a more entrepreneurial company, they will be better positioned to compete and win in these challenging markets.”

As a stand-alone business, the SPC flow unit will be wholly focused on providing pressure control products and services primarily in the U.S., with operations also in Australia, Papua New Guinea and Trinidad & Tobago.

“This team is one of the most experienced wellhead teams in the industry,” commented Rusty James, vice president of the SPC flow business, in the release. “This transaction allows us to go back to our roots, centered around the legacy of Wood Group Pressure Control.”

Pelican said it signed a binding agreement to purchase the SPC flow business unit from Baker Hughes. The transaction is expected to close fourth-quarter 2020.

Baker Botts provided legal counsel to Pelican Energy Partners for the transaction. McDermott Will & Emery served as legal counsel to Baker Hughes and BofA Securities acted as its financial adviser.

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