Cameron, Schlumberger Form JV
Formation of a JV to develop subsea products and services for oil & gas companies.
Cameron International Corp. (NYSE: CAM) and Schlumberger Ltd. (NYSE: SLB) plan to form a joint venture to manufacture and develop products and services for the subsea oil and gas market.
This new company will offer a change in reservoir recovery for the subsea oil and gas industry through integration and optimization of the entire production system over the life of the field. The integration of the production system will be accomplished by combining reservoir knowledge, wellbore technologies, and subsea technologies.
Cameron and Schlumberger have 60/40 ownership of the joint venture, respectively. Under the terms of the formation agreement, Cameron will contribute its existing subsea division and receive $600 million from Schlumberger
Schlumberger will contribute its Framo, Surveillance, Flow Assurance and Power and Controls businesses. Cameron will manage the joint venture and will consolidate it for financial reporting purposes. Cameron will reflect minority interest in its financial statements for Schlumberger’s interest in the JV.
Cameron chairman, president and chief executive Jack B. Moore said, “Our new venture with Schlumberger provides a powerful marriage of their oilfield services technology and our subsea equipment heritage. It leverages Cameron’s flow control expertise, world class manufacturing and aftermarket capabilities.”
Schlumberger chief executive Paal Kibsgaard said, “This new joint venture, which combines the forces of two world-class companies, is uniquely positioned to optimize complete subsea production systems and help our customers improve production and recovery from their subsea developments. The broad scientific and technology platform that Schlumberger brings will enable a total system approach, leading to a unique and differentiated offering in this rapidly growing market."
A key priority of the joint venture will be strengthening research and engineering investment, including complementary projects with the parent companies, towards the integration of the complete subsea production system from pore space to the export point, in order to unlock reservoir potential from our customer’s subsea developments.
Credit Suisse acted as financial advisor to Cameron. Goldman, Sachs & Co. acted as financial advisor to Schlumberger
Houston-based Cameron provides flow equipment products, systems and services to the oil and gas industry. Houston-based Schlumberger provides technology, project management and information solutions to oil and gas exploration and production industries.
The combination of the two oilfield services companies gained approval from analysts. James C. West, an analyst with Barclay’s Capital Inc., said the joint venture was not a surprise given that Schlumberger announced plans to expand in the subsea market at a conference in September. “We feel the JV with Cameron creates a powerful force in the subsea processing market,” he wrote in a recent report on the deal.
The combination of the two is a good move for both companies.“The partnership brings together Schlumberger’s expertise in subsea processing and platform integration with Cameron’s vast capabilities in subsea tree manufacturing. We feel the combined technologies will allow both companies to move towards a step change in optimizing subsea processing,” he said.