Schlumberger Limited - ChampionX Corporation

Summary

On 2 April 2024, Schlumberger Limited (Schlumberger) announced its intention to acquire 100 per cent of the shares in ChampionX Corporation (ChampionX).

Schlumberger and ChampionX both supply oilfield services globally and in Australia. In Australia, Schlumberger supplies oilfield services throughout the lifecycle of an oil or gas well, while ChampionX focuses on artificial lift technologies and production chemical technologies, which are supplied during the production phase of an oil or gas well.

Market definition

The ACCC considered the effect of the proposed acquisition on:

• the supply of sucker rod pumps in Australia
• the supply of drill bits in Australia
• the supply of directional drilling services in Australia
• the supply of core completion services in Australia.

For the purposes of this assessment, the ACCC did not need to reach a concluded view on the boundaries of each market.

Competition analysis

The ACCC concluded that the proposed acquisition was unlikely to substantially lessen competition in any market.

In relation to the horizontal overlap between the parties in the supply of sucker rod pumps in Australia, the ACCC considered that the current alternative suppliers and relatively low barriers to entry were likely to constrain the merged entity.

The proposed acquisition results in vertical integration in relation to:

• PDC cutters which are used in the supply of drill bits,
• PDC bearings and quartz transducers and sensors which are used in the supply of directional drilling services, and
• quartz transducers and sensors which are used in the supply of core completion services.

The ACCC considered whether this vertical integration would likely provide the merged firm with the ability and incentive to foreclose downstream rivals in the supply of the services identified above, and whether foreclosure was likely to substantially lessen competition in affected markets. The ACCC decided that the proposed acquisition was unlikely to substantially lessen competition in those markets. The ACCC’s decision took into account the effect of remedies offered by Schlumberger that were accepted by overseas competition authorities, and, in particular, the divestiture of US Synthetic, as well as supply arrangements that mitigate the merged entity’s potential ability to foreclose its downstream rivals’ access to certain ChampionX products and services.