The Lubrizol Corp. (Wickliffe, Ohio; www.lubrizol.com) has agreed to acquire Weatherford’s (Houston; www.weatherford.com) oilfield chemicals business and its drilling fluids business for $825 million, including a $75 million performance-based cash earnout. The deal enhances Lubrizol’s footprint in the $20 billion oilfield chemicals market, the company says. The acquisition is expected to close by the end of 2014, and, after close, the acquired businesses will form a new segment within Lubrizol, called oilfield solutions.
For Weatherford, an oilfield services company, the deal is the latest in a string of divestitures. The company sold its pipeline services business to Baker Hughes in September, and its land rig operations in Russia and Venezuela to Rosneft (Moscow) in August. These deals, along with the oilfield chemicals divestiture, will bring $1.8 billion in cash proceeds to Weatherford, and will reduce the company’s debt, says Bernard Duroc-Danner, chairman and CEO of Weatherford.
“These divested businesses represent attractive growth platforms for Lubrizol, a technology-driven specialty chemicals company with strong leadership and innovation. The transaction provides Lubrizol the opportunity to leverage Weatherford’s oilfield engineered chemistry and fluid expertise to the benefit of its clients,” Duroc-Danner adds.
The two businesses are called engineered chemistry and integrity industries. The former, the main chemicals business, makes cementing, drilling, flow assurance and hydraulic fracturing chemicals, and operates at ten sites, mainly in North America. The latter produces and sells drilling fluid systems, and operates at 14 sites, also mainly in North America. The two businesses are both headquartered in Texas, although Weatherford itself is incorporated in Ireland. Weatherford moved its state of incorporation to Ireland from Switzerland earlier this year, although the company is listed on the New York Stock Exchange (NYSE) and North America is its largest region by sales.
“With the addition of the companies’ technologies, combined with improved fluid formulation and applications knowledge, Lubrizol will be better positioned to innovate more quickly and become a solutions provider for both multinational oilfield service companies as well as more regional customers which have a significant share of the North American market,” says Lubrizol chairman and CEO James Hambrick.