Weatherford and Schlumberger have formed a joint venture called OneStim targeting the growing needs of the unconventional resource market in the United States and Canada.
OneStim will offer a broad multistage completions portfolio combined with one of the largest hydraulic fracturing fleets in the industry, the companies said.
The move follows an uptick in unconventional resource play activity with stabilizing crude prices and rig counts that have been on an upward trajectory in recent months as the sector demonstrates tentative recovery from the oil price shock of 2014.
It also comes as consolidation in the industry has been ramping up. Competitor Baker Hughes is merging with GE Oil and Gas in a $32 billion combination and announced late last year the relaunch of BJ Services as a pure-play North American land pressure pumping company targeting the same market.
Today’s deal, expected to close in the second half of 2017, will see Schlumberger and Weatherford have 70/30 ownership of the joint venture, respectively. Weatherford will also receive a one-time $535 million cash payment from Schlumberger.
Weatherford will contribute its multistage completions portfolio, regional manufacturing capability and supply chain to the joint venture. Schlumberger will provide OneStim with access to its surface and downhole technologies, operational processes and advanced geo-engineered workflows.
The two companies will contribute all their respective North America land hydraulic fracturing pressure pumping assets, multistage completions and pump-down perforating businesses. Schlumberger will manage the joint venture and consolidate it for financial reporting purposes.
"The joint-venture creates a new industry leader in terms of hydraulic horsepower and multistage completions technologies in North America land, which through its scale offers a cost-effective and highly competitive service delivery platform,” Paal Kibsgaard, Schlumberger chairman and chief executive officer, said in a statement.
Weatherford chairman William E. Macaulay said, "The OneStim joint venture creates a leading unconventional products and services provider in North America land. This transaction will allow Weatherford to deleverage its balance sheet while retaining a significant exposure to the unconventional market.”