DEFA14A: SLB to Acquire ChampionX: Employee Talking Points and FAQs Released

ChampionX Corporation releases materials outlining talking points and FAQs for employees regarding the proposed acquisition by SLB, emphasizing the strengths of both companies and the benefits for customers.

Summary

• ChampionX Corporation has released talking points and FAQs for employees regarding the proposed acquisition by SLB.
• SLB is acquiring ChampionX due to the strength of its businesses 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. and expand ChampionX's reach to over 100 countries internationally.
• SLB intends to leverage the best aspects of both organizations, preserving ChampionX's agility and customer relationships in North America.
• Customers will benefit from an enhanced portfolio, geographical reach, and technology innovation.
• ChampionX's artificial lift portfolio is an integrated offering supported by digital capabilities, which SLB intends to preserve and expand internationally.
• The document contains forward-looking statements that involve risks and uncertainties.

Sentiment

Score: 7

Explanation: The document presents a positive outlook on the proposed acquisition, emphasizing the benefits for both companies and customers. However, it also acknowledges the inherent risks and uncertainties associated with forward-looking statements and the integration process.

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. and expand ChampionX's reach to over 100 countries internationally.
• SLB intends to leverage the best aspects of both organizations, preserving ChampionX's agility and customer relationships in North America.
• Customers will benefit from an enhanced portfolio, geographical reach, and technology innovation.
• ChampionX's artificial lift portfolio is an integrated offering supported by digital capabilities, which SLB intends to preserve and expand internationally.
• SLB believes the close customer relationships that have been developed by ChampionX along with the complementary portfolio of production and reservoir chemicals with reservoir characterization and artificial lift technologies will unlock better production performance and recovery factors that are so important to our customers.

Negatives

• The document contains forward-looking statements that involve risks and uncertainties, which may cause actual results to differ materially from those expressed or implied.

Risks

• The ultimate outcome of the proposed transaction between SLB and ChampionX is uncertain.
• The announcement of the proposed transaction could disrupt the businesses of SLB and ChampionX.
• 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 tax treatment of the proposed transaction is uncertain.
• The ability to satisfy 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 results.
• Global market, political, and economic conditions could adversely 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 adversely affect 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 could adversely affect the transaction.
• Cyber-attacks, information security and data privacy could adversely affect the transaction.
• 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 could adversely affect the transaction.
• 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 could adversely affect the transaction.
• Litigation and regulatory proceedings, including any proceedings that may be instituted against SLB or ChampionX related to the proposed transaction could adversely affect the transaction.
• 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 adversely affect the transaction.
• Disruptions of SLB's or ChampionX's information technology systems could adversely affect the transaction.

Future Outlook

The document outlines the anticipated benefits of the proposed transaction between SLB and ChampionX, including enhanced portfolio, geographical reach, and technology innovation for customers. SLB anticipates preserving ChampionX's artificial lift business and expanding it internationally.

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.

Industry Context

This announcement reflects the ongoing consolidation in the oilfield services industry, with larger players seeking to expand their offerings and geographic reach through strategic acquisitions. The focus on artificial lift and digital services highlights the increasing importance of technology and optimization in the oil and gas sector.

Comparison to Industry Standards

• The acquisition of ChampionX by SLB is similar to other major deals in the oilfield services sector, such as Baker Hughes' acquisition of GE Oil & Gas, which aimed to create a more comprehensive service provider.
• ChampionX's focus on rod lift and artificial lift solutions aligns with industry trends towards optimizing production and extending the life of existing wells, similar to strategies employed by companies like Weatherford and Halliburton.
• The emphasis on digital capabilities and production optimization reflects the broader industry shift towards data-driven solutions, as seen in the offerings of companies like Siemens and ABB.

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 benefit from an enhanced portfolio, geographical reach, and technology innovation.
• Suppliers and other business partners may need to adjust to the new combined entity.
• The combined entity aims to increase customer production, reduce overall cost of ownership and lower carbon emissions.

Next Steps

• ChampionX stockholders will need to adopt the merger agreement.
• SLB and ChampionX will work on integrating the two businesses.
• SLB intends to 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

Keywords

SLB, ChampionX, acquisition, merger, artificial lift, rod lift, oilfield services, customer relationships, integration, synergies