Italian oil field services provider Saipem has struck a deal to combine its operations with rival Subsea7 in a tie-up worth over $4.6 billion.
The new entity, to be named Saipem7, will have revenues of some 20 billion euros, or $21 billion, earnings before interest, tax, depreciation, and amortization of over 2 billion euros, or $2.1 billion, and a combined backlog of 43 billion euro, equal to some $45 billion, Saipem said.
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“Highly complementary geographical footprints, competencies and capabilities, vessel fleets and technologies that will benefit the Combined Company’s global client base,” the Italian oil field services major noted in its news release on the merger.
Saipem and Subsea7 previously considered a merger in 2019 to tackle the challenging situation in the oil field services business. Now, analysts have said that it is again a time ripe for consolidation in the oil field services sector, following a consolidation wave in exploration and production, especially notable in the United States.
Commenting on the merger, the CEO of Eni, a majority shareholder in Saipem, said “With this transaction we are creating a global leader of significant industrial and technological value. Over the past few years, Saipem has continuously improved its operational and financial performance, achieving a position of excellence that enables it to play a leading role in this major transformation. This is a great achievement that fully reflects the support we have provided in our role as shareholders.”
Earlier this year, Rystad Energy said the oil field services industry was set to shrink, mostly on the back of a slowdown in onshore oil and gas growth. “After strong and steady growth in 2022 and 2023, the industry posted a more modest 2.4% increase last year and is forecast to shrink by 0.6% this year, led by a 3.8% slide in the shale/tight oil service segment and a 1.1% drop in the ‘other onshore’ sector,” the consultancy said, noting opportunities in offshore oil and gas, which was expected to add 1.8% this year.
By Irina Slav for Oilprice.com
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