425: Schlumberger (SLB) to Acquire ChampionX: Employee Talking Points Released

ChampionX Corporation shared materials with employees regarding the proposed acquisition by Schlumberger (SLB), emphasizing the strengths and customer relationships that ChampionX brings to the table.

Summary

• ChampionX Corporation has released talking points and FAQs for employees regarding the proposed acquisition by SLB.
• SLB is acquiring ChampionX for its business strengths and customer relationships.
• SLB recognizes the value of ChampionX's rod lift business and associated digital services.
• The acquisition will increase SLB's operational footprint in the U.S.
• Customers internationally will benefit from ChampionX's offerings in over 100 countries.
• SLB will leverage ChampionX's customer relationships and technologies to drive performance in the U.S.
• SLB intends to leverage the best aspects of both organizations, preserving ChampionX's agility and customer relationships in North America.
• A joint integration team will focus on integration efforts.
• SLB will review the positioning of ChampionX's brand portfolio.
• Customers will benefit from an enhanced portfolio, geographical reach, and technology innovation.
• SLB's comprehensive portfolio will provide solutions throughout the well lifecycle.
• ChampionX's artificial lift portfolio is an integrated offering supported by digital capabilities.
• SLB anticipates preserving ChampionX's artificial lift business and expanding it internationally.

Sentiment

Score: 7

Explanation: The document presents a positive outlook on the acquisition, highlighting the benefits for both companies and customers. However, it also includes standard forward-looking statements and risk disclosures, which temper the overall sentiment.

Positives

• SLB recognizes the value of ChampionX's rod lift business and associated digital services.
• The acquisition will increase SLB's operational footprint in the U.S.
• Customers internationally will benefit from ChampionX's offerings in over 100 countries.
• SLB will leverage ChampionX's customer relationships and technologies to drive performance in the U.S.
• ChampionX's integrated artificial lift offering has strong customer recognition in North America and generates superior margins.

Risks

• The ultimate outcome of the proposed transaction between SLB and ChampionX is uncertain.
• The announcement of the proposed transaction could disrupt business operations.
• There may be difficulties in retaining and hiring key personnel and employees.
• Maintaining favorable business relationships with customers, suppliers, and other business partners could be challenging.
• The terms and timing of the proposed transaction are subject to change.
• The transaction could be terminated due to unforeseen events or circumstances.
• The anticipated or actual tax treatment of the proposed transaction is uncertain.
• Satisfying closing conditions to the completion of the proposed transaction is not guaranteed.
• Integrating the business successfully and achieving anticipated synergies and value creation from the proposed transaction may be difficult.
• Changes in demand for SLB's or ChampionX's products and services could impact the transaction.
• Global market, political, and economic conditions could affect the transaction.
• Securing government regulatory approvals on the terms expected, at all or in a timely manner is not guaranteed.
• The extent of growth of the oilfield services market generally, including for chemical solutions in production and midstream operations is uncertain.
• The global macro-economic environment, including headwinds caused by inflation, rising interest rates, unfavorable currency exchange rates, and potential recessionary or depressionary conditions could impact the transaction.
• The impact of shifts in prices or margins of the products that SLB or ChampionX sells or services that SLB or ChampionX provides, including due to a shift towards lower margin products or services is uncertain.
• Cyber-attacks, information security and data privacy could pose risks.
• The impact of public health crises, such as pandemics (including COVID-19) and epidemics and any related company or government policies and actions to protect the health and safety of individuals or government policies or actions to maintain the functioning of national or global economies and markets is uncertain.
• Trends in crude oil and natural gas prices, including trends in chemical solutions across the oil and natural gas industries, that may affect the drilling and production activity, profitability and financial stability of SLB's and ChampionX's customers and therefore the demand for, and profitability of, their products and services is uncertain.
• Litigation and regulatory proceedings, including any proceedings that may be instituted against SLB or ChampionX related to the proposed transaction could pose risks.
• Failure to effectively and timely address energy transitions that could adversely affect the businesses of SLB or ChampionX, results of operations, and cash flows of SLB or ChampionX could pose risks.
• Disruptions of SLB's or ChampionX's information technology systems could pose risks.

Future Outlook

The document contains forward-looking statements regarding the proposed transaction between SLB and ChampionX, including statements about the benefits of the transaction and the anticipated timing.

Management Comments

• SLB is looking to acquire us for our strength of our businesses and customer relationships.
• SLB recognizes that rod lift, plus the associated digital services focused on production optimization, are a key part of the artificial lift offering and sees a strong future for all lift methods.
• SLB's intention is to leverage the best aspects of both organizations.
• SLB will preserve the agility and customer relationships in North America, which ChampionX is known for, and maximize the benefit from SLB's market reach internationally.
• ChampionX has extensive recognition in the industry for its technology and people, and also has very well-run operations.
• Customers will benefit from the enhanced portfolio, geographical reach and technology innovation.

Industry Context

This announcement reflects the ongoing consolidation in the oilfield services sector, with larger companies like SLB seeking to expand their offerings and market reach through acquisitions. The focus on artificial lift and production optimization aligns with the industry's drive for increased efficiency and recovery factors.

Comparison to Industry Standards

• The acquisition of ChampionX by SLB is similar to other major acquisitions in the oilfield services industry, such as Halliburton's acquisition of Baker Hughes (which was later terminated) and TechnipFMC's formation through a merger.
• These deals aim to create larger, more diversified companies that can offer a wider range of services and technologies to customers.
• ChampionX's focus on artificial lift and production chemicals is comparable to companies like Weatherford and Baker Hughes, which also have significant presence in these areas.
• The emphasis on digital capabilities and production optimization reflects the industry's increasing adoption of data analytics and automation to improve well performance.

Stakeholder Impact

• Shareholders of ChampionX will receive consideration for their shares.
• Employees of both SLB and ChampionX may experience changes in their roles and responsibilities.
• Customers will have access to a broader range of products and services.
• Suppliers may see changes in their relationships with the combined company.
• The acquisition could impact competition in the oilfield services industry.

Next Steps

• ChampionX stockholders will vote on the merger agreement.
• SLB and ChampionX will work to integrate their businesses.
• SLB will file a registration statement on Form S-4 with the SEC.
• The definitive proxy statement/prospectus will be mailed to stockholders of ChampionX.

Key Dates