Cameron, Schlumberger announce subsea joint venture

Cameron and Schlumberger Thursday announced a joint venture to serve the subsea oil and gas market, with a goal of gaining market share in offshore drilling and increasing reservoir recovery rates.

“The future of deepwater development is significant, but we witness the challenges every day of both the technical and commercial limitations our customers are faced with in bringing those deepwater developments to life,” Jack Moore, Cameron chairman, president and CEO told analysts in a conference call to announce the venture Thursday.

Under terms of the agreement, Cameron will contribute its existing subsea division to the venture, to be called OneSubsea. Schlumberger will contribute $600 million, along with its Framo, Surveillance, Flow Assurance and Power and Controls businesses.

Cameron will manage the venture and retain 60 percent of the ownership.

Moore said that John D. Carne, Cameron’s executive vice president and chief operating officer, will serve as CEO of OneSubsea.

Paal Kibsgaard, Schlumberger CEO, said in a statement that the venture is intended to help customers improve production and recovery.

“The broad scientific and technology platform that Schlumberger brings will enable a total system approach, leading to a unique and differentiated offering in this rapidly growing market,” he said.

The transaction is subject to regulatory approvals, and Moore said the impact would be long-term.

“You’re not going to turn a light switch on tomorrow with this,” he said.

He said the chance to acquire Framo, along with Schlumberger’s reservoir knowledge, was a clear advantage.

“I’ve spent 22 years of my career competing with Schlumberger. The knowledge they have of well-bore construction … is a tremendous value,” he said.

Analysts on the call were generally complimentary.

“What a fabulous, fabulous deal,” one said. “Improving recovery from reservoirs has been the holy grail forever. If there was a better marriage to find that holy grail, I’m hard-pressed to find out what it is.”