Drill Sector Consolidation with New JV from Baker Hughes and Akastor
In a move designed to address the ongoing challenges in the global offshore drilling segment, the U.S.-based Baker Hughes and Norway’s Akastor have agreed to create a joint venture company bringing together Baker Hughes’ Subsea Drilling Systems business with Akastor’s MHWirth subsidiary. Analysts have been predicting a consolidation in the drilling sector in response to the prolonged downturn in the oil and gas business along with the growing transition to alternative fuels.
The new operation, which will be owned 50-50 by Baker Hughes and Akastor, will combine the operations to provide global services for customers as well as driving productivity and cost synergies. According to the companies, the broader scope of services will also provide a more solid foundation for future growth, including the capability to participate in the oil and gas industry’s transition towards more energy-efficient solutions, as well as deploying technologies and service solutions to make the sector more competitive through increased drilling efficiency.
“The oil and gas industry is rapidly evolving, and we are constantly looking at new and innovative ways of delivering value to our customers,” said Neil Saunders, executive vice president of Oilfield Equipment at Baker Hughes. “This company is the perfect fit between our respective portfolios and further transforms our core operations for long-term success, bringing complementary solutions to market and offering our customers a full offshore drilling equipment package.”
The transaction will create a leading equipment provider with integrated delivery capabilities, financial strength, and increased flexibility according to the executives of the two companies. “This transaction is a major step for MHWirth, and the transformation strategy announced in February 2019,” said Kristian M. Røkke, chairman of Akastor. “The company will offer customers a strengthened product offering and investors attractive value creation.”
The completion of the transaction is subject to customary conditions, including regulatory approvals. It is expected to occur in the second half of 2021. The new company will retain its current offices in Houston, Texas, and Kristiansand, Norway. Merrill A. “Pete” Miller will serve as chairman and chief executive officer. Miller has been in the oil and gas industry for over 40 years holding various leadership roles including chairman, president and chief executive officer of National Oilwell Varco.