Liberty Oilfield Shares Climb 35% on Combination with Schlumberger’s Pressure Pumping Business

Source: Streetwise Reports   09/01/2020

Liberty Oilfield Services shares traded higher after the firm reported that Schlumberger will contribute its North American pressure pumping business to Liberty in exchange for 37% equity ownership in the company.

Hydraulic fracturing company Liberty Oilfield Services Inc. (LBRT:NYSE) and global oilfield services firm Schlumberger Ltd. (SLB:NYSE) today announced an agreement for the “contribution of Schlumberger’s onshore hydraulic fracturing business in the U.S. and Canada (OneStim^®), including its pressure pumping, pumpdown perforating, and Permian frac sand businesses to Liberty in exchange for a 37% equity interest in the combined company.” The firms advised that the combined company will focus its efforts on providing sustainable development and best-in-class completion services for unconventional resource plays in Canadian and U.S. land markets.

The companies indicated that that the transaction is anticipated to close in Q4/20, but remains subject to Liberty shareholder and regulatory approvals along with certain other customary closing conditions. It is expected that Liberty Oilfield Services will continue to be led by its current management team after the transaction is completed.

Chris Wright, chairman and CEO of Liberty Oilfield Services, commented, “From day one, the Liberty team has been laser focused on delivering superior returns for our customers and stockholders…This transaction will be a transformative step forward in our journey as a company. Our expanded technology portfolio and breadth of operations will enable Liberty to further raise our already high bar for safe, innovative, efficient and ESG-conscious frac operations. I look forward to the OneStim team joining Liberty on our mission to help customers provide low-cost clean oil & gas to our country and the world.”

Schlumberger’s CEO Olivier Le Peuch remarked, “I’m very proud we have reached this agreement to combine our OneStim business with a leader in North American hydraulic fracturing who shares a like-minded focus on customers, technology, people and our safety culture. This partnership provides an ideal home for our OneStim business and its employees and is in line with our capital stewardship strategy while benefiting from future market upside through our equity stake. Alongside the comprehensive suite of services and products that Schlumberger continues to offer in North America land, this partnership with Liberty will uniquely position us to leverage our technology and scale to significantly improve our customers’ performance.”

Liberty Oilfield Services is an independent hydraulic fracturing services provider headquartered in Denver, Colo. The company delivers onshore oil and natural gas services to exploration and production companies in North America. The firm stated that “it focuses on improving tight-oil completions, and an emphasis on customer partnerships and technology to find innovative answers to frac optimization.”

Schlumberger Ltd. is based in Houston, Tex., and was described in the report as “the world’s leading provider of technology for reservoir characterization, drilling, production, and processing to the oil and gas industry.” The company employs more than 85,000 people and provide services in over 120 countries. Schlumberger reported that it achieved revenues of $32.9 billion in 2019.

Liberty Oilfield Services started the day with a market capitalization of around $728.4 million with approximately 112.9 million shares outstanding and a short interest of about 4.5%. LBRT shares opened 13% higher today at $7.31 (+$0.86, +13.33%) over yesterday’s $6.45 closing price. The stock has traded today between $7.31 and $9.19 per share and is currently trading at $8.72 (+$2.27, +35.19%).

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