Aker Solutions, SLB and Subsea7 Complete the Deal to Create the OneSubsea Joint Venture
OneSubsea’s portfolio of leading technologies will improve the performance of subsea assets while improving energy efficiency and reducing CO2 emissions. Aker Solutions will own 20 percent of the new company and receive a total consideration of US$700 million in the deal.
Aker Solutions, SLB and Subsea7 today announce the final closing of the previously announced joint venture, Aker Solutions said in a press release. The new business, called OneSubsea, will drive innovation and efficiency in subsea production, helping clients unlock reserves and reduce cycle times.
OneSubsea now includes the subsea businesses of Aker Solutions and SLB, which include a broad complementary portfolio of subsea production and processing technologies, world-class production scale and capacity, access to industry-leading reservoir and digital technology expertise, unique pore integration capabilities in technological processes. and strengthening R&D capacity.
OneSubsea’s field-proven subsea processing capabilities are viewed by customers as unparalleled in terms of enhanced oil recovery and long-term layover capabilities. Its unique portfolio of compression technologies has proven its potential to reduce the structure and capital costs of developing new energy reserves, while subsea projects have proven to be inherently more carbon efficient than topsides solutions.
“By combining our strong and complementary competencies and technologies, we will drive transformational change in the industry that will benefit our customers and employees, and significantly enhance shareholder value. For Aker Solutions, today is also a defining moment in our strategy. We have evolved from a stand-alone subsea business to the proud co-owner of a leading global subsea company,” said Kjetel Digre, CEO of Aker Solutions.
Mads Hjelmeland, a Norwegian national who previously served as SLB’s director of subsea production systems, has been appointed chief executive officer of OneSubsea.
“OneSubsea’s extensive technology portfolio and engineering expertise allows us to address future trends and market needs at a unique scale. In doing so, we aim to fulfill our goal of pushing the boundaries of the undersea world to achieve a sustainable energy future,” said Hjelmeland. “We will accelerate innovation and support our customers’ efforts to optimize their production and reduce emissions from their subsea operations.”
OneSubsea will be headquartered in Oslo, Norway and Houston, Texas, and employ 11,000 people in all key operating regions around the world.
Aker Solutions owns 20 percent of the joint venture, with SLB owning 70 percent and Subsea7 owning 10 percent. In addition, Aker Solutions receives a total consideration of US$700 million for the sale of a 20 percent interest in the joint venture, calculated as follows:
The proceeds from SLB of US$306.5 million were settled in the form of 5,057,706 SLB shares. The shares were settled on a weighted average price basis for ten trading days ending on the fifth trading day preceding the closing of the transaction and are subject to a lock-up period of 180 days.
Proceeds from the sale of a 10 percent stake in Subsea7 amounted to US$306.5 million. Of this, $153.25 million was repaid in cash at closing and the remaining $153.25 million will be repaid with interest no later than June 30, 2024.
The proceeds from the JV note in the amount of $87.5 million will be paid, together with interest, to Aker Solutions with a minimum of 50 percent within one year of closing and the balance within two years of closing.
Aker Solutions will recognize accounting gains from the transaction of approximately $1 billion in the fourth quarter of 2023.
Aker Solutions retained approximately $300 million in operating cash flow from its subsea business from the second quarter of 2022 to date. The subsea joint venture will make an important contribution to Aker Solutions’ earnings growth through its 20 percent ownership in a larger and stronger subsea company. The estimated synergy potential of the new joint venture is over US$100 million per annum over the medium term and the joint venture will have an attractive dividend policy.
Aker Solutions estimates revenue in 2023, excluding subsea activities, to be around NOK 34 billion. The business has a strong order book of over NOK 73 billion, providing a clear path forward and is well positioned to seize opportunities in rapidly changing energy markets.
In the third quarter, Aker Solutions will report three current reportable segments. Beginning in the fourth quarter of 2023, Aker Solutions will report on two of its segments; Renewable energy sources, mining and life cycle. In addition, Aker Solutions will account for its 20 percent interest in the subsea joint venture using the equity method in accordance with IFRS. Aker Solutions will therefore recognize 20 percent of the shares of the joint venture.
